"The matter is now fixed for 15th September for orders (on framing of charges)," special CBI judge OP Saini said on Monday after special CBI prosecutor UU Lalit wrapped up his final argument in the 2G spectrum allocation case
New Delhi: A Delhi court will decide on 15th September whether to put former telecom minister A Raja, DMK MP Kanimozhi and 15 others on trial for their alleged role in the second generation (2G) spectrum allocation scam, which according to Central Bureau of Investigation (CBI) has caused a loss of Rs30,984 crore to the public exchequer, reports PTI.
"The matter is now fixed for 15th September for orders (on framing of charges)," special CBI judge OP Saini said on Monday after special CBI prosecutor UU Lalit wrapped up his final argument, rebutting the plea of innocence by all the accused, including three telecom firms, two bureaucrats, nine corporate honchos and a filmmaker.
Mr Lalit wrapped up his argument while pleading to the court to frame charges of corruption and other penal offences against all 17 accused and put them on trial for their alleged roles in the case.
While concluding his argument, Mr Lalit told the court that Swan Telecom and Unitech got the licences despite their complete ineligibility to get the same.
He said both the companies off-loaded their shares soon after getting the licences and garnered around Rs7,300 crore in the process.
The special public prosecutor, specifically appointed by the apex court to prosecute the case, however, clarified that there is no evidence or material available on record to indicate that there was any quid pro quo by Unitech (Tamil Nadu) Wireless Pvt Ltd vis-à-vis anybody or party.
"We are conscious that so far as Unitech is concerned, we have found nothing to show any money trail against them. There is no quid pro quo as far as money exchanging hands is concerned in relation to Unitech," he said.
Shahid Usman Balwa-promoted Swan Telecom got the licences which increased the value of their share tremendously, Mr Lalit said, explaining the criminal culpability of the firm and its promoter in the case.
"The fact that Swan Telecom had licences in their pocket, the value of their share has increased so much that 40% share of this company is given at around Rs4,000 crore.
Look at the tremendous jump in their value," he said.
Concluding their month-long, day-to-day arguments on framing of charges in the 2G case on 25th August, all 17 accused including Mr Raja and DMP MP Kanimozhi, had denied having any alleged criminal culpability in the scam and had sought to be discharged from the case.
Special prosecutor Mr Lalit, who began his arguments on 21st July, had said it was Mr Raja who had approved the grant of dual technology, 2G spectrum licences to telecom firms like ADAG's Reliance Communication and others a day before even formally inviting the applications for it.
The agency claimed there was sufficient prima facie evidence to frame charges against 17 accused under provisions of the Indian Penal Code (IPC) and the Prevention of Corruption Act, dealing with criminal conspiracy and giving and accepting bribe.
Seeking discharge from the case, Ms Kanimozhi had sought to drag prime minister Manmohan Singh in the 2G case threatening to make him a witness in the case.
"If the trial goes on (against her), I would summon the prime minister as a witness," she had submitted through her lawyer and senior advocate Sushil Kumar.
Mr Raja too had said that he would get prime minister Manmohan Singh, then finance minister P Chidambaram and present telecom minister Kapil Sibal summoned as witnesses to prove that the government did not incur any loss in the 2G spectrum allocation.
Nifty to witness staggered rise to 5,100
As suggested last week we got a market rally today. With the political drama at the Centre coming to an end on Sunday and chances of another stimulus package for sagging the US economy next month, domestic investors were seen once again on the Street, ending the three-day losing streak. Today's gain in the indices almost covered the past three days' losses. The surge of 3.58% on the Sensex and 3.62% on the Nifty was the highest since 28 May 2009. As we mentioned in our weekly report on Saturday, the market may target 5,100 on the Nifty.
Taking cues from the gains in the Asian pack, following US Federal Reserve chairman Ben Bernanke's remarks that the central bank would consider additional policy tools at its September meeting, the Indian stock exchanges opened on a firm footing today. The conclusion of the political impasse over the weekend also brought relief to the market. The Nifty resumed trade at 4,806, up 58 points, and the Sensex gained 232 points at 16,081. The opening figure on the Nifty was its intra-day low and the low on the Sensex was 16,069.
All sectoral gauges were trading in the positive on across-the-board buying, with IT and technology stocks emerging as the top sectoral gainers. The surge continued through the post-noon session on support from key European indices, which were trading mostly in the green. The market went on to touch its intra-day high in late trade, with the Nifty scaling 4,934 and the Sensex going up to 16,462. The indices closed trade off the day's highs. The Nifty settled at 4,920, up 172 points and the Sensex soared 568 points to close the session at 16,416.
The advance-decline ratio on the National Stock Exchange (NSE) was a positive 1233:212.
The BSE Mid-cap index climbed 2.48% and the BSE Small-cap index gained 2.06%.
All sectoral indices settled in the green. The BSE IT (up 5.06%) led the gainers. Other top performers were BSE Metal (up 4.63%), BSE Realty (up 4.43%), BSE TECk (up 4.15%) and BSE Bankex (up 4.10%).
The top gainers on the Sensex were TCS (up 7.32%), Jaiprakash Associates (up 6.92%), Jindal Steel (up 6.75%), Tata Steel (up 5.90%) and Larsen & Toubro (up 5.45%). The only losers on the index were ONGC (down 1.10%) and Maruti Suzuki (down 0.02%).
The key Nifty gainers were Reliance Capital (up 13.22%), HCL Technologies (up 8.19%), TCS (up 7.35%), Reliance Power (up 7.25%) and Kotak Bank (up 6.98%). ONGC (down 4.42%) and Maruti Suzuki (down 0.09%) were the losers on the Nifty also.
Markets in Asia, with the exception of the Chinese benchmark, closed higher following positive comments from the US Fed chief. However, the Japanese index pared some of its gains on news that the country's finance minister Yoshihiko Noda had won the run-off vote for the leadership of the ruling party that would make him the next prime minister.
The Hang Seng surged 1.44%, the KLSE Composite added 0.17%, the Nikkei 225 gained 0.61%, the Straits Times advanced 1.59%, the Seoul Composite climbed 2.84% and the Taiwan Weighted closed 1.79% higher. On the other hand, the Shanghai Composite declined 1.37%.
Back home, foreign institutional investors were net sellers of stocks worth Rs226.95 crore on Friday. On the other hand, domestic institutional investors were net buyers of stocks worth Rs392.90 crore.
State-run Navaratna oil explorer Oil India (OIL) is chalking out an expansion and diversification strategy that could also include an entry into the city gas distribution space. The company is also considering entering the gas transportation market since it already has expertise in laying pipelines and transporting gas through pipelines. The OIL scrip closed down by 0.62% at Rs1,298.40 on the NSE.
Titan Industries is eyeing a near three-fold increase in its turnover from the watches division to Rs3,500 crore by 2014-15, driven by new designs and network expansion, according to an analyst report. The company also expects its eyewear division to break even by 2012-13. Titan is looking to expand its eyewear and accessories business with 177 stores, by getting into new sub-categories. The stock gained 2.16% to Rs206.15 on the NSE.
Pharma major Wockhardt is likely to launch 12-15 products in the US market this fiscal as it has received approvals for seven abbreviated new drug applications (ANDA) this year. The company also plans to extend its reach in the European market. At present, Wockhardt markets over 60 products in the US. The stock gained 0.84% to settle at Rs383.40 on the NSE.
The ombudsman scheme for the capital market, approved and notified by SEBI eight years ago, has not been implemented by successive chairmen for mysterious reasons. Will the market regulator, under its new chairman, introduce the scheme at least now to safeguard the interest of investors?
One of the weakest areas in investor protection in the capital and securities market has been the poor grievance redressal mechanism. The 2009 Swaroop Committee report states that the investor population in our country has declined from 20 million in the 1990s to just over 8 million in 2009. One of the main reasons for this steep fall in the investor population can be attributed to the rampant malpractices observed in the capital market, the short-changing of investors at various levels, and the absence of any mechanism for expeditious and satisfactory disposal of investor complaints in a time-bound manner.
The Reserve Bank of India (RBI) had on 14 June 1995 introduced the banking ombudsman scheme, which has been functioning reasonably well under the guidance and supervision of the central bank. The banking ombudsman scheme has been revamped a few times since then, to provide a satisfactory complaints redressal forum for all customers of commercial banks, and it has resulted in a considerable improvement in customer services and a substantial expansion in banking services.
So, in early 2003, the proposal for an ombudsman for the securities and the capital market was discussed at a meeting of the Legal Advisory Committee constituted by the Securities and Exchange Board of India (SEBI). The Committee, headed by former chief justice of India MN Venkatachaliah, suggested the framing of the Ombudsman Regulations for the capital market, by SEBI, pursuant to its function under section II of the SEBI Act, 1992. Accordingly, a concept paper on an ombudsman for the securities market was prepared and a copy of the draft regulations was put up on the website of SEBI inviting comments from the public in May, 2003.
In all earnestness, taking into account the responses received from the public, SEBI notified the SEBI (Ombudsman) Regulations 2003 for the establishment of the Office of the Ombudsman to redress the grievances of investors in the securities and capital market. (Notification number SO 953(E), dated 21 August 2003.) This was followed by two amendments to the regulations, the first one on 5 December 2003 and a second on 9 November 2006. (Source: SEBI website)
It is said that 'mysterious are the ways of God'. In our context, we could adapt that to say, 'mysterious are the ways of SEBI', for nothing appears to have been done in the past eight years either to appoint an ombudsman, or to set up the office of ombudsman to implement the August 2003 notification issued by the regulatory body itself. Surprisingly the whole scheme has been put in cold storage by the successive chairmen for unknown reasons, while investors continue to suffer at the hands of unscrupulous players in the capital market.
There are numerous examples of how even reputed companies flout rules and regulations with impunity, and SEBI has been able to do precious little to protect the hapless investors. An extreme case of failure to honour the commitments made at the time of the public issue is that of ONGC, a Maharatna company in the public sector, who has not settled the claims of investors arising out of its maiden public issue of 2004, as is evidenced by their own admission in the quarterly results published by them for the last seven years. (Read 'ONGC's mockery of investor services'.) SEBI has been a mute spectator to this, and the company is ready to launch its follow-on public offer shortly.
It is gathered from the statistics published on the SEBI website that during the past 20 years of the existence of SEBI, from 1990 to 2010, more than 27.06 lakh complaints were received by the regulator and 25.46 lakh of these complaints have been resolved, with about 1.6 lakh complaints unresolved. This is an average of over 135,000 complaints a year and an average of over 500 complaints received by SEBI each working day. With the steep fall in the investor population, the number of complaints too has come down during the past few years. Nevertheless, these statistics certainly justify the need for a strong and efficient grievance redressal machinery in the interest of developing the capital market along healthy lines.
SEBI should now conduct a thorough investigation into this matter and answer the following questions to restore the confidence of investors in the capital market and trust in the institution of the market regulator itself.
1. What is the reason for not implementing the ombudsman scheme in the capital market for the last eight years, even though it was duly notified in 2003?
2. Who is responsible for such callousness in not implementing the scheme that was already notified by SEBI?
3. Is the notification and amendments that were issued still valid, and if so can the ombudsman scheme be introduced now without any further delay?
4. How can SEBI prevent such things from happening in the future, as such inaction undermines the credibility of the regulatory body which is expected to set an example of good corporate governance?
5. Can investors whose complaints have not been settled to their full satisfaction during these past eight years, be permitted to refer their complaints to the ombudsman now, in order that they get a fair deal?
Apart from serving the needs of investors, the biggest advantage of setting up an independent ombudsman is that SEBI, which has enough on its plate, would be relieved from this onerous responsibility and could devote more time and attention to other critical issues that affect the capital market. Therefore, SEBI, in its own enlightened self-interest, should set up the office of the ombudsman without any further delay and create an environment of justice and fair play for the benefit of aggrieved investors in our country.
(The author is a banking and financial consultant. He writes for Moneylife under the pen name 'Gurpur'.)