Former member Mohan Gopal has expressed “strong concern about the gross abuse of power and corrupt practices in the SEBI Board over (the) last two years to protect SEBI chairman CB Bhave from being subjected to independent inquiry with respect to his actions as chairman of NSDL during the IPO Scam”
New Delhi: A former member of SEBI (The Securities and Exchange Board of India) has alleged that the Board of the securities market regulator “abused” its powers to protect the then chairman CB Bhave from being subjected to any independent inquiry with “respect to his actions as NSDL (National Securities Depository Ltd) Chairman” during the IPO scam, which related to irregularities in share allotment in various initial public offers (IPOs) between 2003 and 2006, reports PTI.
In a letter to the Prime Minister, the then SEBI member G Mohan Gopal wrote, “As an outgoing (part time, independent) member of the SEBI Board, I write to convey my strong concern about the gross abuse of power and corrupt practices in the SEBI Board over (the) last two years to protect SEBI Chairman CB Bhave from being subjected to independent inquiry with respect to his actions as Chairman of NSDL during IPO Scam.”
The letter written on 24 December 2010 has been made public by the Prime Minister’s Office in an RTI (Right to Information) reply to activist SC Agrawal.
The PMO has said it has forwarded the letter to the finance ministry for further action.
When contacted, Mr Bhave declined to give any comments.
The finance ministry also said, in its RTI reply dated 8 April 2011, that it has forwarded the letter to SEBI for its comments and even sent three reminder letters but no reply has come (so far).
The finance ministry had set up a committee consisting of two SEBI members—G Mohan Gopal, now the National Judicial Academy director, and V Leeladhar—to look into the IPO scam.
The committee had passed three orders and found that NSDL had failed in its duty.
It had also passed remarks against the manner in which SEBI had functioned during the scam days. Mr Gopal, in his letter to the Prime Minister, has alleged that his “objections to illegal and unethical actions” did not elicit any response in the board and he was “isolated and threatened” for the same.
“I brought issues to the attention of the Finance Secretary at an early stage, to no avail, mainly because the representatives of the Ministry of Finance on SEBI Board (no longer with the Ministry of Finance) were an active part of developing and implementing the impugned actions,” he wrote.
NSDL was given a clean chit last year by SEBI when CB Bhave was its chairman.
Mr Bhave had recused himself from the SEBI board meeting in February 2010, when the NSDL matter was discussed, as he had previously headed the depository.
The Supreme Court had asked SEBI to reply whether it would revisit its decision to give a clean chit to NSDL in the 2006 IPO scam.
The apex court had expressed concern over SEBI’s outright rejection of the report, and had asked the market regulator to give its stand.
It had remarked that as the committee comprised senior SEBI officials, the report should have been considered by the regulator.
The apex court was also not convinced by the submissions of SEBI that the committee exceeded its limit.
Curiously, SEBI did a U-turn in the Supreme Court last week when it filed an affidavit agreeing to restore orders indicting Mr Bhave in the IPO scam.
In an affidavit filed on 5th May, SEBI said it would reconsider the very orders it had declared as non-est in November 2009 when Mr Bhave was chairman.
Special public prosecutor UU Lalit, appearing for the CBI, opposed her bail plea, saying, "The controlling mind of Kalaignar TV is Sharad Kumar but behind the scene the person who is controlling everything in Kalaignar TV is this lady"
New Delhi: Keeping the suspense on, a Delhi special court today reserved orders on DMK MP Kanimozhi's bail plea after the Central Bureau of CBI strongly opposed it saying she is "controlling everything" in Kalaignar TV, which got Rs200 crore from Dynamix Balwa group, from behind the scene, reports PTI.
Special judge OP Saini said the order on bail pleas of Ms Kanimozhi and Kalaignar TV MD Sharad Kumar will be pronounced on 14th May, a day after the results for the assembly elections will be out.
Special public prosecutor UU Lalit, appearing for the CBI, vehemently opposed her plea, saying, "The controlling mind of Kalaignar TV is Sharad Kumar but behind the scene the person who is controlling everything in Kalaignar TV is this lady (Ms Kanimozhi)."
Appearing yesterday in response to the special court's summons for his alleged role in the 2G spectrum allocation scam, the 43-year-old daughter of Tamil Nadu chief minister M Karunanidhi had pleaded for bail and sought it on grounds of being a woman and a MP.
She also sought to shift the blame on former telecom minister A Raja for the second generation (2G) spectrum allocation scam.
Kalaignar TV MD Sharad Kumar too had appeared along with her and had moved court for bail.
The CBI told special judge Mr Saini that Ms Kanimozhi and her family have a majority stake in the TV channel, which received Rs200 crore from the company which got telecom license and spectrum illegally during the tenure of Mr Raja.
The CBI contended that there was sufficient evidence to prove Ms Kanimozhi's complicity in the transaction of Rs200 crore paid by the Balwa group.
"Ms Kanimozhi and Sharad Kumar's complicity in the entire transaction of Rs200 crore is clearly made out," Mr Lalit said while pleading with the court that no lenient approach be shown to them and that they be sent to judicial custody like other accused in the case.
The investigating agency further submitted that the DMK family holds 80% stake in the TV and all the decision regarding financial transaction must be known to them.
It said that DMK chief Karunanidhi's wife Dayalu Ammal holds 60% stake in the company but she is not actively involved in its running which is done by Ms Kanimozhi and Sharad Kumar.
"If a family holds 80% share in a company, it is impossible to think that anyone other than members of that family could run the company," Mr Lalit said.
Sell the rallies; Nifty to face resistance at 5,600-5,650
The market was mostly weak, continuing from the previous week, and recorded a 7% drop in its longest losing streak in a decade. The Sensex lost 1,392 points and the Nifty slumped by 425 points in nine days till Thursday. But on Friday, it pulled back strongly, snapping the losing run.
Over the week, the market declined 3%, the Sensex closed at 18,519, down 617 points, and the Nifty ended at 5,551, a loss of a 198 points. As the market tries to retrieve its losses, the Nifty is likely to face some resistance at 5,600-5,650.
Hero Honda and BHEL (up 3% each) were the top gainers on the Sensex. The losers were led by Reliance Communications, Bajaj Auto (down 10% each), Reliance Infrastructure (down 8%), Sterlite Industries and Bharti Airtel (down 7% each).
All sectoral gauges settled lower. The big losers were BSE Metal (down 5%) and BSE Realty (down 4%).
The indications are that this may not be the end of the decline, as a big drop in major commodity prices this week and weak European markets have strengthened the possibility of a global decline in all asset classes in the next few months.
But the highlight was the Reserve Bank of India's larger-than-expected 50 basis point rate hike, aimed at tackling stubborn inflation. The central bank underlined it would take further measures necessary, even at the cost of short-term growth, and this somewhat rattled investors.
The RBI also revised its growth forecast for the current fiscal downwards to 8% compared to the government's earlier expectation of 9%.
Surprisingly lower earnings announcements by major companies like Bharti Airtel, Hero Honda and Cipla also weighed on investors. It's been a disappointing earnings season and any change in direction will depend largely on global factors.
On the economic front, manufacturing output, as measured by the HSBC Purchasing Managers' Index (PMI) stood at 58 in April, marginally up from 57.9 in March. The latest reading indicates strong growth of the Indian manufacturing sector that was the fastest in five months. However, the rate of expansion eased slightly from last month's 31-month high. The increase in new export orders also slowed to a three-month low.
The output of six core infrastructure industries grew by 7.4% in March 2011, an improvement from the 6.8% expansion clocked a year ago. Crude oil production topped the table with a growth of 12.1% in March, while finished steel production showed an improvement to 9.9% in the month.
For the 2010-11 fiscal, the key infrastructure sectors-with a weight of 26.7% in the overall Index of Industrial Production (IIP)-expanded by 5.9%, as against 5.5% in the previous year.
Food inflation fell to 8.53% for the week ended 23rd April from 8.76% in the previous week, on the back of a fall in the prices of pulses, reversing the upward trend seen in the previous fortnight. Food inflation stood at 20.91% in the corresponding week last year.
The country's services sector continued to expand in April, as indicated by the HSBC Business Activity Index which rose to 59.2 in April from 58.8 in the previous month. The latest reading was a level above the long-run series average of 58.2 and indicative of a sharp growth in the rate of activity in the services sector.
On the international front, non-farm payrolls in the US jumped by 244,000 in April, much above analysts' estimates for a 186,000 gain.
The European Central Bank (ECB) on Thursday kept its key interest rate unchanged at 1.25%, in line with market expectations. The ECB had raised the rate by 25 basis points (bps) at its April meeting, in a bid to curb inflationary pressures. Investors will be looking to see if the central bank will tighten policy in June.