The Hindu Business Line : Serious Fraud Office for prosecuting DSQ Soft

In the wrong
The company manipulated share prices
Fraudulently created shares to take advantage of the manipulated share price
Sold 1.3 crore shares in the market at an exorbitant price

New Delhi , April 25

The Serious Fraud Investigation Office (SFIO) has recommended prosecution against DSQ Software Ltd (DSL) for manipulation of share price, falsification of accounts, diversion of funds and violations under the Companies Act.

The Ministry of Company Affairs (MCA) had entrusted the SFIO with investigations into the affairs of DSL to establish any case of white-collar fraud.

The main business of the company includes activities related to development of software, programmes and packages.

Mr Dinesh Dalmia became its Managing Director in March 1992 and continues to hold the position till date.

As per the SFIO report, Mr Dinesh Dalmia along with group entities of DSL are guilty of cheating investors by manipulating share prices, fraudulently creating the shares to take advantage of the manipulated share price and lastly by selling 1.3 crore shares in the market at an exorbitant price.

Inaccurate accounts

The SFIO report said the accounts of the company for the period1998-99 to 2001-02 were inaccurate. Funds amounting to Rs 242 crore were diverted in the form of investment in group/associate company shares at a very high value and subsequently over a two-year period the same were diminished to nil, the SFIO report stated.

The report also indicates that DSQ Holdings/ DSQ Software have transferred funds worth Rs 85.67 crore to two Ketan Parekh Group companies - Classic Credit Ltd and Panther Fincap and Management Services Ltd.

"This may have helped Mr Ketan Parekh to manipulate the share price of the company through brokers of various exchanges," it concluded.

Cos Act violations

The investigation has also brought out several violations of provisions of the Companies Act such as failure to bring amount reduction in share capital despite submitting an affidavit in this regard before the Company Law Board, submission of documents to Registrar of Companies containing misleading and false information, non-transfer of unpaid dividend to special dividend account, failure to distribute dividend within 30 days of its declaration, and investments and loans given by the company were in excess of the limits prescribed.

While declining to comment on the specific findings of the SFIO in the case, Mr Prem Chand Gupta, Minister for Company Affairs, said: "We are committed to bring to book the erring entities at the earliest."

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