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Sambhar Mafia - Cooked To Kill!

Tuesday, September 20, 2005

Back to Square D

If the Interpol has its way, the man who was behind DSQ Software and DSQ Biotech will be behind bars. Those who witnessed the software boom in the mid 90’s and the stock market boom in the late 90’s would definitely remember Dinesh Dalmia. Originally from Calcutta, Dalmia had a big establishment in Chennai. The CBI website also has a list of offences committed by him. Dinesh Dalmia’s website continues to project his laurels and accomplishments. The financial press in India has largely ignored these developments. I haven't seen much coverage about this incident in the last few month(s). (via)

In case you don’t know the logic behind the company name, here is the formula:

Dinesh Dalmia = D^2 = Square D = DSQ



New York Post has more on the same:

Dalmia's journey to this world of masked identities and numbered accounts began in the teeming streets of Calcutta at the start of the 1990s, where he set up an outsourcing body shop they called Square D Software Ltd.

In the decade that followed, Square D Software expanded across Europe and the U.S. until, by the end of the decade, it was racking up revenues that approached $64 million annually — bringing in investors ranging from Bank of America and Merrill Lynch, to Credit Suisse First Boston and the Templeton funds.

Yet neither the investors nor any regulators seemed even the slightest bit concerned as more and more of the company's soaring revenues began sluicing through a multiplying array of Dalmia-owned or controlled "associate" firms.
Nor did they seem to mind that the companies in this bewildering network kept changing their names as the tech boom roared on. In the U.S., a Texas-incorporated entity that Dalmia's Indian operation owned under the name D Square Software Inc., changed its name eight times between 1993 and 2003, but Texas regulators dutifully processed the paperwork without ever asking why.

The name changes for Dalmia's U.S. operations reflected similar activity elsewhere in the network. In Britain, the authorities seemed equally uninterested when Dalmia set up a private company, which he himself controlled, and, began using it to channel business to India. The U.K. company underwent five separate name changes of its own during the period.

Only when the shares of Dalmia's public company in India — by then known as DSQ Software Ltd. — soared a stunning 341% during the first three months of 2000 did Indian authorities at last take notice. In the probe that followed, they wound up uncovering the pump-and-dump scheme as well as four separate offshore shell companies in Mauritius and Tortola that the plot revolved around.

But Dalmia was hardly sitting on his hands, and while the regulators were investigating him, he was busy secretly transferring DSQ's worldwide assets into some of the same offshore shell companies he had used for his pump-and-dump.

In early 2002, Dalmia began negotiations to sell this buried treasure to a Singapore-based outsourcing company called Scandent Group. Founded the year before by an Indian businessman named Ramesh Vangal, Scandent boasted a board of advisers that knew little about the body shop business but whose members had been longtime friends of Vangal. Included among them: the former CEO of Pepsi Cola, Christopher Sinclair; Geier of Interpublic; and Bronfman and father, Edgar Sr., who once employed Vangal as head of Asian operations for the Seagram Co. empire.

10 Comments:

  • Didn't know he was such a big fraud...One of my best friends held a top position in DSQ Madras.! I hope he is ok.!!!

    By Blogger Narayanan Venkitu, at 2:05 PM  

  • I have also tracked on these DSQ dudes. I dont know how these big time PE guys invested without doing a due diligence.This was classic pump & dump scheme easily spotted by a good run thru their books.

    ashwin

    By Anonymous Anonymous, at 2:44 PM  

  • He sure had a brain though.. I guess this time around, lots of foul play are going on in a lot of scripts, some penny stocks that have appreciated by 1000%, hiding in the facade of the bull run.I Got lucky in a script, bought it on tips from some yahoo groups and when i found articles that it had some things comming like some 5 star hotel projects. The stock appreciated to more than Rs 130 from 15 in a few months, but i was shocked to find the company mentioned in TOI for possible pump and dump. It was like a lotterry for me :-) though..

    By Anonymous tony, at 3:07 PM  

  • I repented having lost my oppurtunity to win a job at DSQ during campus recruitment !Guess you have made my day Kaps !

    By Blogger Somu, at 5:34 PM  

  • hi
    first time hearing about this guy...
    he was clever culprit though........
    prakash

    By Blogger dfg, at 5:38 PM  

  • advance wishes for your 50K hits...

    By Blogger Ram.C, at 8:48 PM  

  • Wow! That was some news... I have heard about DSQ, but never knew he was a fraud... Wonder why the media is not making a big scoop out of this story... Is the media biased?

    By Blogger Peak Day Blues, at 9:08 PM  

  • Well,

    all i can say is i had a lucky and narrow escape :-D

    (even though only in hindsight)

    By Blogger Arvind, at 11:31 AM  

  • @Venkitu Sir,
    the media has to bring these guys to light

    @Arvind,
    I don't know how the Pvt Equity guys made such big mistakes

    @Tony,
    Better to be careful during such bull runs. Lot of small time stocks might increase without even having a sound fundamental

    @Somu,
    Good that u didn't join DSQ

    @Prakash,
    Better to know about such stories so that we can exercise caution next time

    @Ram,
    Thanks a lot for the continued support

    @Radhakrishnan,
    i'm sure the media turns the blind eye to these people

    @Arvind,
    Glad to know that u escaped.

    By Blogger Kaps, at 4:49 PM  

  • I used to be a part of SquareD' Telecoms (TNN) wing during 96-97. I felt they had quite good potential with a wast and exiciting array of services for their remarkable list of clients. Also, I felt the company regarded their employees well(that included me too). I was never direclty involved with DD at anytime(as I was in the middle management tier) but he was generally regarded as a man of words. Sad to see Square D collapsed, I wonder whats the status with their offices (GR Complex) in Nandanam

    By Anonymous Phuse, at 1:11 AM  

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