What was the scandal?

OnMobile was on news for various bitter reasons. Arvind Rao, CEO of OnMobile bought approximately 6 lakh shares of his company from open market of borrowed money on November 23, 2010. He did this because he felt that his baby OnMobile was under-valued. Where in 2008, one share valued at 700, it fell to Rs 277 a share in 2010. But this buyback of shares proved to be the worst decision he ever made.

The shares continued to fall and he was on the verge of breaking down. He requested the board for a salary increase, arguing that his Rs 1 crore salary was too low for the CEO of a 600-crore company. It was denied and so the personal loan request he made. Left with no other option he took the “shortcut”.

In November 2011 OnMobile’s finance department received a set of bills from a vendor they hadn’t dealt with before. The bills amounted to nearly Rs 12 crore which were alarmingly large. They had been forwarded directly by Arvind Rao. Finding Rao Guilty, the company announced that Rao, would look after only international customers while the company’s day-to-day operations would be overseen by a special board committee.