CORPORATE LAW AND THE TELGI SCAM: A CRITICAL ANALYSIS OF REGULATORY GAPS
By Mrunal S. Kulkarni, Savitribai Phule Pune University, Pune.
Abstract
When the corporate governance fails, it creates opportunities for fraud, as demonstrated by Telgi scam. The Telgi scam, which came to light in the early 2000s, involved the large-scale counterfeiting of stamp papers in India. Abdul Karim Telgi, the mastermind behind the operation, exploited significant weaknesses in the corporate governance and regulatory frameworks of the country. This led to substantial financial losses for the government and various institutions, highlighting critical flaws in India’s corporate laws and the enforcement mechanisms that were supposed to safeguard against such fraudulent activities. In the aftermath of the Telgi scam, India has undertaken considerable efforts to strengthen its corporate laws and regulatory frameworks. These reforms have aimed to address the vulnerabilities that allowed the scam to occur. However, despite these advancements, regulatory gaps still exist, creating potential opportunities for fraud to resurface. Ongoing reforms are focused on enhancing oversight and governance; nevertheless, challenges remain in effectively closing these loopholes and ensuring comprehensive compliance. The Telgi scam serves as a crucial case study in the failure of corporate governance, illustrating how inadequate regulatory oversight can lead to large-scale fraud. This incident has underscored the necessity for stronger legal controls and proactive measures to prevent similar occurrences in the future. The primary research problem revolves around identifying and analysing the specific regulatory gaps in corporate law that facilitated the Telgi scam, as well as examining how these weaknesses contributed to the overall fraud. It can be hypothesized that weak corporate governance and insufficient regulatory oversight directly enabled the Telgi scam, thereby emphasizing the urgent need for robust reforms to mitigate the risk of future fraudulent activities. Proposed reforms should prioritize strengthening regulatory mechanisms, enhancing transparency, improving whistle blower protections, and upgrading technology for better monitoring and enforcement, ultimately aiming to close existing loopholes. The overarching aim is to conduct a thorough analysis of the regulatory gaps exposed by the Telgi scam. Key objectives include examining how these weaknesses facilitated the fraud and assessing their broader impact on corporate governance in India, culminating in effective proposals for future risk mitigation.
Keywords – Corporate Governance, Large Scale, Regulatory Framework, Regulatory Gaps, Reforms, Loopholes.
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