CVC examining finance ministry report on charges against ex-SEBI member

Ex-SEBI member KM Abraham had alleged that certain corporates and finance ministry officials were exploiting the vulnerability of the market regulator, which was investigating crucial cases involving prominent business houses. However, the ministry termed the allegations as 'false, vexatious and defamatory'

New Delhi: The Central Vigilance Commission (CVC) is examining a finance ministry report on complaints against KM Abraham, a former member of capital market regulator Securities and Exchange Board of India (SEBI), by a sitting member of parliament (MP), reports PTI.

"We have got the response from the finance ministry, which is currently under examination," a senior CVC official said.

The ministry had late last month submitted its findings to the Prime Minister's Office and the anti-corruption watchdog, among others, relating to the complaint forwarded to it by the CVC.

"The complaint was in regard to certain irregularities pointed out by the MP. We had called for the finance ministry's response on it," the official said, refusing to divulge further information.

In a recent letter to prime minister Manmohan Singh, accessed by PTI in response to an RTI query, Mr Abraham had alleged that certain corporates and finance ministry officials were exploiting the vulnerability of the market regulator, which was investigating crucial cases involving prominent business houses.

However, the charges raised by Mr Abraham were rejected by the finance ministry.

In a statement issued on 30th August, the finance ministry dismissed the allegations of interference in the market regulator's job as 'false, vexatious and defamatory'.

The ministry said it had received numerous complaints against Mr Abraham, ranging from corruption to abuse of power.

These include complaints from several MPs about his conduct, while references have also been received from the CVC and Department of Personnel and Training (DoPT).

"The regulatory institution is under duress and under severe attack from powerful corporate interests, operating concertedly to undermine SEBI... I believe these insidious attempts are orchestrated from the office of the Union ministry of finance," Mr Abraham had said in his nine-page letter to the prime minister on 1st June.

The finance ministry has also forwarded a complaint of alleged tax evasion against Mr Abraham and another former whole-time SEBI member, MS Sahoo, to the director general of income tax (Investigation), Mumbai, for necessary action in accordance with the law, the reply said.

Mr Abraham and MR Sahoo retired from SEBI in July.

The former SEBI member, in his letter, alleged direct or indirect interference by certain top government functionaries in cases involving private and public sector giants like Sahara Group, Reliance (both the Ambani Groups of companies), Bank of Rajasthan and the MCX Stock Exchange.

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COMMENTS

Dr Vaibhav Dhoka

5 years ago

Unless some concrete action is taken on persons like Mr Abraham & Mr Sahoo public who has no faith in SEBI as can be seen from dwindling number of Investors from capitol market can only be revived to some extent.When people at helm are corrupt and inefficient the system becomes MESSY.God save Indian Investors who are at mercy of SEBI(Officials/coterie)

Impeachment proceedings against justice Sen dropped

The Lok Sabha decided to drop impeachment proceedings against justice Soumitra Sen after the government on Sunday notified the resignation

New Delhi: The Lok Sabha will drop impeachment proceedings against justice Soumitra Sen, originally scheduled for today, reports PTI.

The decision was taken at a meeting finance minister Pranab Mukherjee had with law minister Salman Khurshid and parliamentary affairs minister Pawan Kumar Bansal.

Speaker Meira Kumar also consulted the government and political parties over the issue in the morning.

"There will be no impeachment as the process has now become infructuous after justice Sen's resignation was accepted," a senior minister said speaking on the condition of anonymity.

He was asked whether justice Sen's impeachment as listed in Lok Sabha business for today, will be taken up.

"I have to consult because there have been new developments. I will be talking," the speaker had told reporters outside Parliament before the House commenced.

The government had yesterday notified the resignation of justice Sen of the Calcutta High Court.

In the normal course, such a notification is not required since the resignation of a constitutional authority is deemed to be accepted if it is in order.

Attorney general GE Vahanvati had opined on Friday that impeachment proceedings, having already been completed in the Rajya Sabha, should be completed by the other house.

This opinion appeared to be based on the premise that the resignation letter faxed by justice Sen to Rashtrapati Bhavan on Thursday could not be taken cognisance of since such letters must be written in the hand of the judge as per Art 217 (a) of the Constitution.

Justice Sen had later sent his handwritten letter to the president on Saturday paving the way for dropping the impeachment motion in Lok Sabha against him.

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Cochin Port Trust bats for DP World, LBW cabotage

A one-sided contract between Cochin Port Trust, the landlord, and DP World Ports Vallarpadam Terminal, its tenant, has led to intense lobbying over cabotage rules. A local problem, which has more to do with a local solution, is being used as a catalyst to push a deeper agenda with a national bearing. The country's interests are at the stake, once again, for reasons that increasingly appear to be very shady

A few days ago, the minister of shipping made an announcement pertaining to restricting and controlling the entry of old ships into Indian territorial waters and Indian ports. Broadly, the statement was about new rules to be promulgated shortly on this subject and some other aspects pertaining to shipping in India. That perfectly decent rules existed in 2005 and were withdrawn without explanation in 2006 has been reported on Moneylife. (Read, 'Why are overage ships with improper documents being chartered for Indian ports?')

However, as always, announcements tend to conceal more than they reveal, and the real truth behind the new rules lie elsewhere. In the current dispensation, it appears that in some convoluted manner, these new rules may also well be used to relax the cabotage laws as they stand in India. A variety of vested interests appear to be behind this move. National interest, however, does not seem to be present. (Some of the issues on cabotage were covered in 'Anchoring cabotage laws in India'.)

Now, according to media reports, some of the loudest voices on the removal of cabotage appear to be emanating from the Cochin Port Trust, whose own container terminal lies unutilised due to-among other things-high handling charges, as well as a one-sided deal with neighbouring Dubai Ports-controlled DP World's Vallarpadam terminal.

Thanks to what probably deserves an immediate investigation, the contract with the tenant, DP World, does not allow the landlord, Cochin Port Trust, itself to handle containers till DP World Vallarpadam reaches a throughput of 3.5 million TEUs per annum. Imagine a scenario where, for example, Indian Railways allows a private entity to run a private Rajdhani Express on Indian Railways tracks, but will not permit booking on its own Indian Railways Rajdhani Express till the private Rajdhani is running full to capacity.

How and why Cochin Port Trust signed such a contract with DP World in the first place is conveniently being ignored. So, because of an assortment of reasons which have more to do with probably shady deal-making at the contractual stage, an easy way out is being sought, by trying to sellout on a matter that is of serious national importance-cabotage. This would have been funny, if it weren't for the simple fact that the livelihood of workers as well as heavy loss of taxpayers' money in signing such contracts, were not realities that set the country back by thousands of crores of rupees.

Globally, countries protect their own shipping interests, whether inland, coastal or deep-sea. Simply stated, economic and military security depends, in no small measure, on this simple fact and truth, and it is a jealously-guarded national interest; along the same lines of military control, currency, foreign relations and similar. It is for this very reason that shipping-inland, coastal or deep-sea-is a subject on the Central list, barring certain minor exemptions.

Cabotage, within the Indian context, is covered by sections 406 and 407 of the Merchant Shipping Act, 1958. In brief, it reserves coastal shipping solely for Indian flag ships, adhering to Indian laws. Similar laws exist across the world, in, for example, the US, China, Greece, Indonesia, Brazil, Malaysia and others. Many of these cabotage laws, like the Jones Act in the US, are extremely rigorous and cover not just the nationality of the crew, flag and registration, but also construction and repairs to be performed nationally in the 'home' country.

Exemptions are made on a case-to-case basis. Within the Indian context, this means that a commercial enquiry for a foreign ship to be operated on cabotage waters is first circulated to the Indian National Shipowners' Association (INSA), which has the first right of refusal. And here lies the first flaw: INSA operates like a closed club, composed largely of members who themselves, have more foreign flag ships in their fleet than they do Indian. Barring the government-controlled Shipping Corporation, it tests where INSA's real interests lie.

This is over and above the fact that INSA makes it very difficult (and expensive) for new entrants. Potential shipowners, inland shipowners, small shipowners, and even those who simply do not make the cut for unknown reasons, are all going to find it difficult to become INSA members.

The big question here, on the Cochin Port Trust/DP World Vallarpadam container terminal, is not about cabotage being relaxed to hopefully increase container traffic. That will be dealt with in another article, as well as possible solutions suggested, on a national level. It is convenient for DP Ports Dubai and Cochin Port Trust to blame low throughput on cabotage laws when the truth lies elsewhere.

The big question on the larger national issue here is: does the Cochin Port Trust represent the interests of the Indian people and its government, or those of DP World Ports, Dubai? Because cabotage is without argument an issue of national importance, something like military or currency, and cannot be negotiated just because of possible faulty contractual obligations.

This, incidentally, is without going into the whole issue of DP World Ports of Dubai, and the controversies surrounding its operations in other countries; for example, the US. That, again, is another series of articles-just who are we giving our ports, gateways and all the security issues therein, to run? For example, have we forgotten the importance of Kochi as a major Indian naval base?

The issue of cabotage is too deep to be given away just for some short-term gains. It involves much more than coastal shipping. There are aspects of inland and river shipping, national security and most of all, the most vital element of the safekeeping of the country's economy.

Cochin Port Trust should re-work the lop-sided contract with Vallarpadam Terminal operators, and then compete on equal terms, doing all this with full transparency. For a start, it should reveal who was responsible for this one-sided contract that has prevented its own terminal from operating.

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COMMENTS

Java

5 years ago

DP World seems to be well entrenched in many other Indian ports like Vizag, Nhava, Mundra, Chennai, so is this a fait accompli?
http://webapps.dpworld.com/portal/page/p...

REPLY

malq

In Reply to Java 5 years ago

Thank you for writing in, Java ji.

The monopoly of DP World is one part, which hopefully will be addressed by entities like the Competition Commission of India.

The bigger issue is that cabotage is one of those sovereign responsibilities, like defence currency, economy or foreign policy, which can not be bartered away come what may.

That is the real issue.

rgds/VM

pradyot

5 years ago

In the season of scams, this seems par for the course. Surprising nevertheless given the geography --- being right under the nose of the squeaky clean union minister for defence. It comes under his nose for jurisdictional reasons too --- Southern Naval command is located as close to the terminal as The TAJ mumbai from Western Naval command HQ .

REPLY

Malq

In Reply to pradyot 5 years ago

Thank you for writing in, praetor, and yes - national security is a major reason for ensuring cabotage is not frittered away. As it is the coast is wide open, and with relaxation of cabotage, we can say goodbye to centuries of shipping skills across multiple disciplines from ship building, repairing, operating and more. In the name of "free trade", we end up giving away everything, and to whom?

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