CEO On The Other Side

Lawyer and Managing Partner MZM Legal, Zulfiquar Memon spoke to Rotarians about the nature of white collar crime

“THE nature of white collar crimes is such that you cannot trust anybody. It is like a classic thriller scene where you never find out what happened. The most important ingredient in any fraud is greed. And greed is something you cannot negotiate, it’s not something that you can sit down and speak to somebody or talk about.”

“Last year, I got called to Nigeria by an Indian businessman who was very well settled there. They had sent a plane, I was very excited. After a little probing, I got to know that he was the largest drug and narcotics smuggler in Africa. I couldn’t run away from there or tell him to his face that I don’t do this. I came on his plane, I had to go
back on his plane.”

“There were 30 to 40 armed men standing by my side. In my four-hour conversation, I had to eventually muster up the courage to tell him that I could do this. On my way back, I was assessing what drives this guy to commit such offences… is it money? Is it power? For him, it was territorial power: acquiring more and more territory. He had just started supplying to the US and they had initiated extradition proceedings to extrude him from Africa. That is where he wanted my assistance. I refused. A couple of months back, I heard that the US picked him up in the middle of golf and he is now at the US Central Jail.”

“In all of these classic, sophisticated crimes, the most important ingredient is greed. The offence is greed-driven. The complexity, magnitude and scale of corruption has added fuel to fire. Nobody is spared, everybody is involved.”

“It was not so in the early 90s when I had just started practicing with my father, a criminal lawyer. A criminal lawyer was a one-man army going to court, filing bail applications, filing witness statements, filing police complaints, conducting trials, upholding social rights. Bail was the rule, jail was an exception. Then came liberalisation. Large companies came in and the media started playing a very important role. Everything became sensationalised and glamorised. Every bit of news was processed and dissected on TV. With the change in crime, we started witnessing large-scale fraud.”

“The classic UTI scam – Rs 20,000 crore – the first time we had heard these numbers, not many know how to even calculate them. Investors committed suicide. Eventually the government had to bail them out. Many scams like that followed, the fodder scam, agriculture, real estate, stock market. People lost thousands of crores. Can we blame anybody? Yes, the system! There was corruption and manipulation. But with it there was technology, growth, progress and with them came all of these money laundering offences. Large scales of money were looted. Can someone spend Rs 20,000 crore in his lifetime? It is just greed; it is about territorial power. It is the greed to acquire. The government is facing new challenges, trying to bring more legislation, more amendments. It is making the life of the layman difficult but it is the need of the hour.”

“In the 90s, when all of these scams began to come to light, criminal lawyers suddenly started getting all the wealth and fame. In the last few years, I have interviewed hundreds of law students who have no idea of criminal law but wanted to join white collar crime. It is just because of the glamour and media, everything looks so fancy. But it is not like that, it is very dark.”

“I remember the Telgi scam. Classic case! What manipulation! I remember Anna Hazare walking in to our office with a one rupee coin, my father was at his peak as a defence lawyer then. Anna Hazare gave him the rupee and said, ‘I want to use your expertise and I want to be a whistleblower and unearth this scam. It is such a complex scam, it is going to be difficult for people to understand.’ It was challenging, we took it up. My father filed the PIL under Anna Hazare’s instruction and we unearthed this massive scam.”

“Abdul Karim Telgi had managed to get access to the government press, to print stamp papers. The idea was that they were not fake stamp papers but unauthorised. They were distributed by a network of 173 officials all over India: 18 cities, 120 bank accounts, wrongful gains of 200 crore a month. These stamp papers were distributed to banks, real estate companies, financial organisations, corporations, business houses, massive 1000-crore deals signed on stamp papers made by Abdul Karim Telgi. How do you undo it? Of course the PIL was successful. It was an image saver for criminal lawyers and we managed to bring down many people in high positions.”

“Things have evolved, the entire structure of white collar crimes has become complex. We work closely with forensic experts, digital forensic experts, there are new methods and technology. It is a task to even comprehend a scheme. In another case, it has taken more than three months for us to understand how the paper work was done. My point is, it is no more as simple as when you got the documents, went to the lawyer and said, ‘please defend me’. You have to be a scientist, you have to understand the client and the complexity of how he did it. In most cases, they say they are not wrong and there is a crack in the system of which they have taken advantage. But we all are responsible people; we all have to go back to society and see where the cracks need to be repaired. Another massive scam is about to happen in crypto-currency. I am already in talks with the Singapore law firm and that is going to run in billions of dollars. Why? Because people like us want to invest in opportunities. Greed! It’s everywhere.”

“We become victims of these frauds. We don’t want to go to the lawyers because we want to save money. But you need us before you get into anything, not after, because the recovery of money in this country is zero. EOW (Economic Offences Wing) set up a pecuniary jurisdiction of Rs 50 lakh. Within no time, they increased it to Rs 2 crore because every household has a Rs 50 lakh matter. Now it is Rs 6 crore and still they are overburdened. We are talking of thousands of crores, what is the EOW going to do? Media is not even interested in Rs 500-600 crore scams any more. The EOW is doing whatever it can but when victims come for recovery, the money is gone. That makes the job of a lawyer more difficult because there is expectation of recovery of money. Criminal law does not allow recovery of money, it allows for penal offences and punishment.”

“Prevention is better than cure, we all need to be intelligent and wise and make sure that our books are in order and not get carried away by fancy scams or business proposals that are thrown at us everyday. We are vulnerable to these things.”

“Towards the end, with all these scams that happened, there is one that changed the way we looked at scams because this is where law enforcement agencies played an important role: the 2G scam. We were fortunate to represent a couple of people in the scam; for six years, we religiously conducted the trial and towards the conclusion, every single accused was acquitted. This is not because they were too smart; this is because the investigation was shabby, with all respect to the CBI. Sensationalism by the media puts so much pressure that irresponsible journalism goes to the extent of passing judgement. The whole case is narrated in a graphic view of how it all happened. And we, as lawyers, think that may be these guys should be in the court and make a presentation before the judge and perhaps be the judges and pass verdicts, like they do on their news channels.”

“The 2G case was a victim of the pressure by the media. Every accused was paraded, arrested, caused massive set backs. Ministers were arrested and eventually, at the end of the day, did it stand the test of trial? Thus, it is not just about unearthing an offence or blaming someone, but about investigation. Law enforcement agencies and citizens have to work hand in hand to enhance knowledge of legal happenings and update our systems. We have to make sure that our books are clean. There are new legislations which make sure that everybody should go back and check their policies otherwise we are exposing ourselves to more scams. The menace is spreading so fast from smallest to largest places due to greed and corruption. And we are all part of it.”

“Finally, before I end, I want to read out certain Supreme Court Orders. In light of all this media sensationalism, the SC has passed an order in a case of anticipatory bail rejection where in the SC has gone to the extent to pass an order and commented that “… offenses of these nature and white collar crimes do not deserve anticipatory bail”. That order has now armed every single prosecutor who is going to wave that order on the face of the judge where people like me and you are made the accused in a wrongful FIR and if you go for an anticipatory bail. Power corrupts, absolute power corrupts absolutely.”

MR MEMON READ OUT THE STATEMENT OF SPECIAL CBI JUDGE O P SAINI WHO WAS THE FULCRUM OF THE 2G TRIAL:
“I may also add that about the last seven years, on all working days, summer vacation included, I religiously sat in the open court waiting for someone with some legally admissible evidence in possession. But in vain. Not a single soul turned up. This indicates that everybody was going by the public perception created by rumour, gossip and speculation. However, public perception has no place in judicial proceedings. By this all the accused are acquitted’.”