Regulations
Finance Ministry dismisses allegations made by former whole-time member of SEBI as distortion of facts

As the tussle between KM Abraham and the Securities and Exchange Board of India gets more bizarre, the finance ministry has gone one step further, saying it has received serious complaints against the former member of SEBI of abuse of power and corruption

The Abraham-SEBI saga is getting more bizarre day by day. In a very unusual move, the finance ministry has issued a strongly-worded statement saying that recent allegations made by Dr KM Abraham, a former whole-time member (WTM) of the Securities and Exchange Board of India (SEBI), are defamatory, devoid of any truth and a complete distortion of the facts.

The ministry has said that it received complaints from several sources against Dr Abraham, ranging from abuse of power to corruption and the purchase of a flat at a concessional rate from an entity, which had benefitted from a deal on the sale of office space to the National Stock Exchange (NSE).

While the NSE is regulated by SEBI, Dr Abraham as WTM had jurisdiction to decide on many critical issues related to the exchange, the ministry said. NSE's purchase of land in Kohinoor City, at Kurla, in suburban Mumbai, is also an interesting story, that Moneylife had reported in August 2009. (Read, 'The Mystery of NSE's land acquisition at Kohinoor City'.)

In addition, the finance ministry said it received references on the alleged links between Dr Abraham, the NSE and the National Securities Depository Ltd (NSDL), on the matter of the role of SEBI in trying to protect NSDL in the initial public offers (IPO) scam, which led to a loss of Rs115 crore. (Read, 'Moneylife stand on SEBI-NSDL vindicated.) 

According to the statement, since January 2010 it has also been receiving letters on the conduct of Dr Abraham. The Central Vigilance Commission (CVC) and the Department of Personnel & Training (DOPT) also referred a complaint received from a member of parliament (MP) to the finance ministry.

"All this while Dr Abraham was making efforts to continue as a whole-time member for another two years. Failing in his efforts, he tried to become the head of the National Institute of Securities Markets (NISM) on the basis of a recommendation made by CB Bhave, the previous chairman of SEBI, without submitting a panel of names as was required under the relevant rules. The ministry in a fair and transparent process advertised the posts for the selection of WTMs. The last date for the receipt of applications was 18 April 2011."
 
"Thereafter, Dr Abraham sent the letter to the prime minister (PM) alleging interference by the Ministry of Finance in the affairs of SEBI, in a host of cases, through the present chairman, SEBI (UK Sinha). The allegations made against the Union finance minister (Pranab Mukherjee) or his advisor (Omita Paul) that they put pressure on Shri Sinha to manage any case whatsoever, or that the Regulator's integrity has been undermined are false, vexatious and defamatory," the statement from the ministry said.

Mr Sinha reacted with an equally hard-hitting letter (read, 'The stink coming from SEBI-1')  which Moneylife has reviewed. The letter exposes the murky goings-on in the past three years under CB Bhave, whose allies in the process were two key members of SEBI. Remember, that during that period, Mr Bhave had positioned himself as a champion of the small investor and a crusader against corporate malpractices. Moneylife alone has been reporting with persistence the real murky practices inside SEBI.

Dr Abraham's credibility, or the lack of it, has to be seen from his own utterances regarding Mr Sinha, the current SEBI chairman. After a conference on 4th May, Dr Abraham praised Mr Sinha. However, within a month he changed tack and wrote a letter to the PM accusing the income-tax department of harassing him over the purchase of an apartment in Mumbai (we will come to the details later).

Dr Abraham also accused finance ministry officials of interference in his work "with the knowledge of finance minister Pranab Mukherjee". And as it turned out, his sharpest and most specific allegations were reserved for UK Sinha, his new boss, for interfering in several high-profile cases!

According to the statement, the finance ministry has all along taken a dispassionate view in the complaints against Dr Abraham that have even been referred to it by MPs. It has refused to intervene in the cases where even Dr Abraham was alleged to have acted in a partisan manner and told the aggrieved parties that they should take recourse of the existing legal mechanisms to redress their grievances.

"The minister (Mr Muikherjee) has strictly respected the integrity and independence of SEBI. As the advisor of the finance minister has said, 'She did not know Mr Abraham and she had never spoken to him'. Equally, nobody from the ministry, much less the finance minister, has ever tried to in any way to interfere with any case pending with SEBI at any level," the finance ministry said.

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Justice Sen resigns ahead of Monday’s impeachment motion

Justice Soumitra Sen of the Calcutta High Court was found guilty of misappropriating Rs33.23 lakh under his custody as a court-appointed receiver in the capacity as a lawyer, and misrepresenting facts before a Calcutta court in a 1983 case

Kolkata: Justice Soumitra Sen of the Calcutta High Court on Thursday avoided the ignominy of becoming the first judge to be impeached by Parliament by tendering his resignation, reports PTI.

53-year-old justice Sen sent in his resignation to president Pratibha Patil five days before the Lok Sabha was to take up an impeachment motion against him.

The Rajya Sabha has already passed the motion making him the first judge to have been impeached by the Upper House for misconduct.

In his letter to the president, justice Sen said, "I am not guilty of any form of corruption."

"There is no allegation against me that I am guilty of passing any order or judgement for extraneous consideration or that I have abused my power in any way so that my family or relatives or acquaintances have amassed wealth, but sadly I am still facing a motion of impeachment," he said.

The judge said in the anxiety to take definitive action against corruption, even a judgement passed by a division bench of the high court was being completely brushed aside with the remark that the judges had favoured him.

Justice Sen who dismissed the charges against him said, "I do not come from a family of judges or politicians." The judge said he had given up a fairly lucrative practice not to amass wealth by resorting to corruption but to serve the august institution being the judiciary and consequently the nation.

Justice Sen, in a separate letter to Lok Sabha speaker Meira Kumar, said, "I wonder whether my issue is the real issue of corruption and abuse of power by people in high places or I am being made a sacrificial lamb in the alter of justice as a showcase to tell the nation that at least something has been done to clean the institution from corruption."

The judge admitted that he may have made 'mistakes' as a junior advocate 19 years back but went on to ask, 'who is above making mistakes, no human being is infallible, but to accuse me of dishonest intention as a judge or otherwise I firmly repudiate."

Justice Sen said like in the Rajya Sabha, he will not get a chance to respond to submissions made by members in the Lok Sabha in his absence and hence "it appears to be a foregone conclusion".

Along with the letter justice Sen gave a point by point rebuttal to three allegations against him made during the Rajya Sabha debate.

"I have decided not to go to the Lok Sabha and instead put in my papers," justice Sen, who was to have appeared before the Lok Sabha on 5th September, said.

Justice Sen was found guilty of misappropriating Rs33.23 lakh under his custody as a court-appointed receiver in the capacity as a lawyer, and misrepresenting facts before a Calcutta court in a 1983 case.

After a seven-hour long process marked by a brainstorming debate on 18th August, the Rajya Sabha had overwhelmingly approved the impeachment motion against Justice Sen.

189 members of the 206 present in the 245-member House voted in favour, recording well over 2/3rd majority required for such a move.

The impeachment, first time in the Rajya Sabha and second in Parliament's history, saw members of all parties, except BSP, holding Sen guilty of misconduct.

Appearing before the bar of the house, 53-year-old justice Sen had denied any wrongdoing and argued that he was a 'victim'. The judge had appealed to members to vote by conscience.

Impeachment proceedings were undertaken after an inquiry committee, set up by Rajya Sabha chairman, held justice Sen guilty of misconduct.

Justice Sen, who became a permanent judge of the Calcutta High Court in December, 2003, had blamed former Chief Justice of India (CJI) KG Balakrishnan of targeting him by becoming the accuser, prosecutor and a judge.

The judge said he was even threatened in the former CJI's drawing room with a CBI enquiry when he declined the offer to take VRS and a plum posting in return for his resignation.

The impeachment proceedings followed motions moved by Sitaram Yechury (CPI-M) and leader of the opposition Arun Jaitley who made it clear that justice Sen's continuance as a judge had become untenable.

Following receipt of justice Sen's resignation letter, the Lok Sabha secretariat said the attorney general would be consulted on the issue.

Justice PD Dinakaran, Chief Justice of the Sikkim High Court, against whom the Rajya Sabha chairman had set up a judicial panel to enquire into allegations of corruption, had resigned on 29th July this year, before impeachment proceedings could be initiated against him.

The first such case involved the impeachment motion in Lok Sabha of Justice V Ramaswami of the Supreme Court in May 1993 which fell due to lack of numbers after Congress members abstained.

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Companies procuring false environment impact reports, ministry overlooks fraud, says former top bureaucrat

Former finance secretary EAS Sarma asks government to reopen all environment assessment reports and to blacklist offending companies and consultants

Former power and finance secretary EAS Sarma has accused some private companies in Andhra Pradesh-many of them pharmaceutical manufacturers-of getting false environment impact assessment reports for their projects, and he charged the environment ministry with overlooking this and sanctioning the projects.

In a letter to the secretary in the Ministry of Environment and Forests, JM Mauskar, Mr Sarma has also complained that the state level Andhra Pradesh Pollution Control Board has neglected its responsibility to conduct public hearings on the basis of these environment assessment reports, apparently because officials have vested interest.

He has demanded that all such assessment reports be re-examined and that the companies and consultants found guilty of such wrongful practice be blacklisted.

Mr Sarma gave the example of a report prepared by Rightsource Industrial Solutions for a bulk drug manufacturing project of Lohitha Lifesciences in Visakhapatnam  district of Andhra Pradesh, parts of which have been copied blatantly from another report, that was prepared for a sponge iron plant.

"Prediction and identification of the environment impact is an important part of the environment study," Mr Sarma wrote. "The consulting company has evidently lifted paragraphs by cut-and-paste from another report on a sponge iron project elsewhere."

He has highlighted the copied portions and it would be relevant to mention the lines here to understand how blatantly this practice is going on. One line in the Lohitha's assessment report reads: "It is absolutely essential to study the impact of air pollution on its environs due to the proposed sponge iron plant."

This matter was raised at a recent public hearing of the state level expert appraisal committee of the ministry, but without any success. Mr Sarma says that the consultant has similarly copied parts of the same sponge iron factory environment report to prepare reports for two other clients, KS Pharma and JPR Labs. Some of Rightsource's other clients are Celon Organics, Vivin Laboratories, Integrin Life Sciences, KMTK Laboratories and Pharmaestro Laboratories.

Another example he has given is of the Ramky Group, whose company Ramky Infrastructure is listed on the stock exchanges. Ramky has set up its own environment assessment agency by the name of Ramky Enviro Engineers, and it has used this agency's services to get clearances for its gas-based power plants and waste recycling complex.

"Andhra Pradesh State Level Expert Appraisal Committee (APSEAC) has also an EIA report prepared by BS Envitech in January 2011, for the group's own project in East Godavari district," Mr Sarma said. "Clearly, there is conflict-of-interest in this. The Ministry of Environment and Forests cannot permit such reports to form the basis of public hearings." BS Envitech apparently has the accredition from the Quality Council of India.

In most cases, the reports have not been given a public hearing. "The environment impact assessment study is supposed to be the basis of a meaningful public hearing process. But neither the developers nor the consultants have bothered to consider this," Mr Sarma said.

He says that even the state pollution control board, which is responsible for arranging the public hearing, has failed to discharge its responsibility. "This is because many of the government officials have vested interests. I know a state-level appraisal committee member who joined one such company as a director as soon as the project was cleared."

What's worse is that regardless of these fraudulent reports, the Ministry of Environment and Forests (MoEF) has been benevolent in granting clearances to such projects. "I am surprised that neither the MoEF nor the Quality Council of India has laid down the basic norms to be observed by accredited consultants. I come back to my original proposal that the MoEF should institute a system of selecting the consultants at random and ensuring that their remuneration is delinked from the project developers," Mr Sarma said.

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