Regulations
SEBI requests MCA to hasten process for winding up Pearl Agro-PACL

In the letter, to SFIO, the markets regulator has asked MCA to take an action against PACL's agents who are still collecting money from investors and expedite the proceedings to wind up the company operations

 

Market regulator Securities and Exchange Board of India (SEBI) has upped its ante against Pearl Agro Corporation (PACL) and recently wrote to Ministry of Corporate Affairs (MCA) to hasten the winding up process of the company, says a report.

 

According to a report from Business Standard, SEBI, on 14th November wrote the letter to MCA alerting the ministry that in spite of passing an order against the company and barring it from raising any more funds from the public, the entity was still collecting money from the public.

 

After receiving tips from market participants that PACL was still operating and was offering investors the dubious scheme in some parts of the country, the regulator conducted its own investigation.

 

“During our survey and investigation we realized that the company has several agents in areas of Uttar Pradesh, Bihar, Uttarakhand, Maharashtra, Ahmedabad that are still peddling the scheme,” a source told the newspaper.

 

In the letter, to the Serious Fraud and Investigative Office (SFIO) of MCA, the markets regulator has asked the ministry to take an action against these agents and expedite the proceedings to wind up the operations of the company.

 

The reference from SEBI on the case has also been forwarded to the finance ministry and Central Bureau of Investigation (CBI). CBI has been directed to conclude their investigation in the matter in a timely fashion.

 

Additionally, SEBI is also likely to issue an advisory to investors to caution them against the scheme.

 

Earlier in August, SEBI had passed an order against PACL, asking it to refund around Rs50,000 crore raised from 58.5 million customers within three months, a deadline that recently got over.

 

In SEBI’s 92-page order, the total amount mobilised by the company, “by its own admission" comes to a whopping Rs49,100 crore and “this figure could have been even more if PACL would have provided the details of the funds mobilised during the period of April 1, 2012 to February 25, 2013.”

 

SEBI order states that PACL operated a land investment scheme, which qualified as a collective investment scheme, without proper registration.

 

The order also mentions that investors failed to receive any land even after years of investments into schemes offered by PACL.

 

In February this year, CBI registered a first information report (FIR) against Nirmal Singh Bhangoo, promoter of PACL and PACL as it found that the company was running an alleged scam worth Rs45,000 crore. PACL ran a collective investment scheme (CIS) under the garb of sale and development of agricultural land.

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A System that gags whistleblowers

Will the new government find a way to engage?

 

On 21st November, The Economic Times reported, “Within a year and half of Ranbaxy whistle-blower Dinesh Thakur getting $48 million for revealing wrongdoing, there has been a fourfold jump in the number of Indians reporting secret tips about misconduct and fraudulent practices to US regulators.” The paper seems to suggest that the whistleblower spirit is blooming in India, even though US lawyers are clearly linking it to the publicity and reward that the Ranbaxy case generated for Mr Thakur. 

 

In truth, the picture in India is bleak. While martyrs like Satyendra Dubey and Shanmughan Manjunath’s sacrifice, at least, generated public anger and awareness (partly because both came from elite institutions and made the rare decision to serve the people rather than chase a fancy paycheque or Ivy League degree), most whistleblowers in India continue to be harassed and  persecuted. 
 
Consider just one example. Subhash Sawant is a popular union leader from Central Bank of India who led a relentless battle to expose the dubious dealings  of its former chairperson Homai Daruwala. As a consequence of the support lent by Bank insiders to the whistleblower, the charges against Ms Daruwala were proved. The Bank spent Rs70 lakh in defending her through the politically-connected Abhishek Manu Singhvi (he was paid Rs50 lakh in fees). This also made it to the public domain due to Bank union’s efforts. 
 
In 2009, Mr Sawant retired from the Bank, but continues to be agitated about the impact of  rising bad loans. He has been creating awareness among the public about how funds are being doled out to chosen industrialists. On 3rd November, Central Bank of India issued him a notice for failing to maintain good conduct as a retired employee and providing ‘misleading information’ to the media about bad loans and their recovery. If the action is taken to its logical conclusion, Mr Sawant’s pension and benefits from the Bank would be affected. 
 
Central Bank of India, has had many controversial chairpersons, including Ms Daruwala, who only got a ‘letter of displeasure’; but it is attempting to silence a bold union leader by threatening his pension. In order to understand why the Bank  wants to silence Mr Sawant,  take a look at the massive bad loans that he has been drawing attention to. 
 
Just 16 corporate groups account for bad loans of Rs4,255 crore. Of these, one particular loan is probably making the Bank’s senior management very jumpy—it is the outstanding of Rs316 crore to Sujana Towers, a company belonging to the recently inducted minister, YS Chowdary, of the Telugu Desam Party (TDP). The Bank claims that Sujana Towers is not an NPA when it is. The table reads like a list of the more outrageous rip-offs of Indian banking by corporate India. It includes the notorious Winsome Diamonds and Forever Diamonds. Three companies belong to the S Kumar group whose promoters continue to be rich, while they owe big money to lenders.
 
Then there is Kingfisher Airlines with dues of Rs365 crore, the Housing Development and Infrastructure Limited and others. 

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COMMENTS

Rangarao Ds

2 years ago

Why not MODI government try to redeem all these substantial NPAs and add to the treasury for nation-building work, instead of chasing the mirage of black money abroad?

Rangarao Ds

2 years ago

Why not MODI government try to redeem all these substantial NPAs and add to the treasury for nation-building work, instead of chasing the mirage of black money abroad?

SuchindranathAiyerS

2 years ago

In 1947, the sine qua non of a "Nation" the rule of law" and the foundation of a "democracy" equality under law were dismantled. This dismantling of law was enshrined in the Constitution. India ever since has punished the victims to reward the tyrants as is the norm in any sleazy tyranny. Those who do not "Quit India" will have to face the rape of justice if not a more physical and material rape. This is India!

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