Amidst the fall in the shares of industrialist Gautam Adani, the Congress has opened a front against the government regarding the Life Insurance Corporation of India (LIC) in Parliament. The Congress alleges that LIC has given a huge loan to Gautam Adani, which can be defaulted anytime. According to the report, in the last one week, the share of Gautam Adani Group has registered a decline of about 55 percent.
But this is not the first time that there has been a ruckus in Parliament regarding LIC. Even 66 years ago, there was a lot of ruckus in the Parliament regarding the shares of LIC. In view of the uproar in Parliament, the then Prime Minister Jawaharlal Nehru had to form an inquiry committee under the chairmanship of a retired judge.
The story of 1957, when the Parliament was boiling in the winter session
The date was December 16 and the year was 1957. On the urgent notice of Congress MP Feroze Gandhi, the Lok Sabha speaker allowed him to speak. Feroze got up and started mentioning the scams in LIC, a one year old organization.
Firoz Gandhi alleged that LIC bought bogus shares at the behest of the Finance Minister. In return, the Congress got a donation of Rs 2.5 lakh. After Feroze’s allegation, the opposition parties created a lot of uproar in the Parliament.
What was the allegation of buying bogus shares?
In the year 1957, Haridas Mundra, a bookie and businessman from Kolkata, sold bogus shares of his company to LIC. Actually, Mundra’s company was worth Rs 1.20 crore, but the company had a debt of Rs 5.25 crore.
Mundra had a meeting with the Union Finance Secretary HM Patel at that time. According to the allegation, in the meeting, Mundra said that if LIC buys the shares, then people will invest in it and then the loss of the company will end.
Later this happened and LIC bought shares worth Rs 1.20 crore without following the rules. After buying the shares, LIC came to know that Mundra’s company has huge debt.
Firoz Gandhi alleged that Mundra donated Rs 2.50 lakh to the Congress in exchange for this deal. Pandit Nehru was shocked by this and asked for an inquiry.
Finance minister’s chair went after investigation
On the allegation of buying bogus shares on behalf of LIC, the then Prime Minister Pandit Jawaharlal Nehru entrusted the investigation to former Chief Justice of Bombay High Court, MC Chagla.
Chagla conducted the investigation in the open court for 24 days. In this, Finance Minister TT Krishnamachari, Finance Secretary and Chairman of LIC came under siege. In February 1958, all three lost their seats.
In this case, Mundra was sentenced to 22 years. Mundra died on 6 January 2018.
What suggestion did Chagla give to LIC after the investigation?
Justice Chagla also gave several suggestions to the government to prevent such forgery. It was suggested that LIC should work for the policy holders and not for any other profit-loss. Apart from this, the government should not interfere much in LIC and make it an autonomous institution.
Chagla further suggested that only a person with financial knowledge should be made its chairman. If a government officer is made its chairman, then he should not be influenced by senior ministers and officers, arrangements should be made for this.
Now the BJP government and the Congress are demanding an inquiry
A lot has changed in 66 years. The BJP, formed in 1980, now has an absolute majority government. Opposition Congress President Mallikarjun Kharge said in the Rajya Sabha that public sector money is involved in the Adani case, so it should be investigated by the Joint Parliamentary Committee ie JPC.
At the same time, LIC’s employees’ union has issued a statement saying that the money of the insurance policy is safe. Congress is doing politics on this.
How much money of LIC in Adani group?
According to the report, LIC has given a loan of about Rs 36 thousand crore to the Adani group, which is in the form of debt and equity. LIC holds 4.23 per cent stake in Adani Enterprises, 9.14 per cent in Adani Ports and 5.96 per cent in Adani Total Gas.
Why was the fear of LIC sinking?
Before Hindenburg’s report came, the investment value of LIC in Adani group was around 77000 thousand rupees. After the fall of the stock, it is believed that it has also declined. Amidst the fall, the new figure has not come yet.
LIC has said in a statement that the company makes any investment for a long time. All the rules and regulations are followed before investing. Short term loss does not make any difference to the stock.
What is LIC, how does it work?
LIC was formed in 1956 by passing a bill in the Parliament. The basic function of LIC is to do insurance. It is the largest insurance company in the country. According to the report of Bloomberg, currently LIC has 25 crore policy holders.
LIC deposits money from the holders at a regular interval and then returns the amount as insurance. LIC deposits 70-75 percent of the policy money in government securities. The remaining 20-25 percent is invested in the stock market. For this also rules and regulations have been made.