The Court, in an interim order, has ordered the government to provide protection to whistleblowers and social activists
In a long overdue judgement, the Bombay High Court (HC) on Friday, (7 May 2010), issued an interim order that would ensure both police protection to whistleblowers and social activists, as well as provide for the speedy investigation of their cases.
Moneylife has, in the past, covered several cases wherein social activists have been threatened, assaulted and even murdered despite pleas for police protection. Many such cases are still unsolved.
The two-member bench, comprising Justices FI Rebello and AA Sayed, passed the interim order that outlined various measures for the protection of social activists and whistleblowers, which covered immediate police protection and set guidelines for the investigation of cases.
The HC specified, among other things, that if a whistleblower or social activist approaches the police after receiving a threat or having been attacked, until the application for police protection is finally processed, the police must immediately provide interim protection.
The Court went on to direct the State government to set up a special committee to identify genuine whistleblowers and activists and ensure that all criminal cases or investigations pending against them be reviewed. It specified that the identification be done in an open and transparent manner and the guidelines of the process be disclosed to the public at the time of forming the committee.
The court also gave the State a 90-day deadline for forming a monitoring system to ensure that the investigations be done in a speedy and thorough manner. It further mandated that the investigations into complaints filed by whistleblowers and activists be investigated by an officer not below the rank of assistant commissioner of police or deputy superintendent of police.
The order also stated that the State government prepare a database consisting of the names of all identified social activists or organisations that have complained of threats in the past and also of the use of force against them if any. The mechanism should ensure the maintenance of confidentiality with regard to the identity of the individual and or the organisation.
The judgement is only an interim order and will be in force till a final order is passed. The case now stands adjourned to 16 June 2010 when the bench will issue further orders and directions on the interim provisions regarding the protection of social activists and
whistleblowers.
The ruling evoked a mixed response from both the legal and activist fraternity, with some enthusiastic about it, and others who feel that the order will not translate into reality.
“Many a time, conclusive orders of the court are not complied with; time and again even courts have shown their inability to monitor implementation of their orders,” said Sandeep Jalan, an advocate.
He went on to offer a suggestion, “Both the appellant and respondents and the government should update their websites about action taken in pursuant of the court’s directions. As long as the appellant's or respondent's website doesn't show up details of action taken, non-compliance of court orders can and should safely be presumed.”
Some, however, were very pleased with the order, “I was represented and party to this order when it was passed and am quite happy with it. The problems that may arise are not in the court order but mainly in implementation. I think the committee will determine the final efficacy of the measures, so we should ensure that the committee has enough representation from committed activists who will be able to ensure that the new system works. The quality of the database to be prepared and the monitoring of police investigations is what will determine its success,” said Sumaira Abdulali, founder of the Awaaz Foundation.
Incidentally, Ms Abdulali had been the target of physical intimidation when she tried to confront the sand mafia about illegal sand mining.
Despite the optimism among some activists, there were others who felt that the order would not change anything.
“Nothing is going to happen on the basis of this HC order. Whistleblowers and activists will (continue) to be harassed, humiliated, victimised, attacked and even murdered in spite of such an order. It is due to lack of will to protect on the part of politicians who are the real culprits behind victimising the whistleblowers and activists. Similarly, the Central Vigilance Commission (CVC) has been made the designated authority by the Supreme Court to protect whistleblowers. But has the CVC, the designated authority, protected even a single whistleblower so far? We may be pleased by such orders, but can’t the court direct the Central government to enact a Whistleblower Protection Act?” said Ramesh Shah (name changed) a former whistleblower from the customs department.
He did, however, offer some words of encouragement. “In spite of being so pessimistic about the implementation of the court order, it is a good sign that judges of the Bombay High Court have taken cognisance of the problems faced by whistleblowers and activists in Mumbai and let us hope that the government of Maharashtra provides protection, as directed by the Hon’ble Court,” added Mr Shah.
Judging by the mixed response from activists, it seems that the effects of the order will only be felt if the State government is serious about protecting whistleblowers.
All will depend on the final ruling that the Court will pass on 16th June.
Scores of investors have lost a huge chunk of their portfolios due to the terrible investment strategies of the Portfolio Management Services offered by Kotak Securities
Portfolio Management Services or PMS schemes are often touted as the best way for wealthy investors to grow their wealth, but that is mostly in theory. Since their performance is never publicly reported, one has to go by anecdotal evidence of the prowess of portfolio managers. And the anecdotal evidence that Moneylife hears from time to time is pretty ugly.
We recently came across a disastrous story—a large number of PMS investors of Kotak Securities have suffered severe losses due to gross bungling by Kotak’s portfolio managers. PMS refers to services offered by finance companies, mainly broking companies, which manage the investor’s portfolio according to their skills (or luck). Unlike mutual funds (MFs), where the allocation patterns are often standard or structured, wealth managers invest according to what they feel best suits your portfolio. They also attempt to time their buying and selling.
While this may result in higher returns compared to MFs, it also carries a bigger risk and is usually used by high net-worth individuals (HNIs). Portfolio Management Services are meant for a minimum investment of Rs5 lakh to Rs10 lakh.
One customer who lost a significant amount of money approached Moneylife. After investing approximately Rs52 lakh in two Kotak Securities portfolios in January 2007, as on 31 March 2010, he had suffered a loss of approximately Rs15 lakh, or 30% of his total investment. In the same period, the fund’s benchmark indices, the BSE Mid-cap and BSE 200 were up by 15% and 30 %, respectively.
While we know that PMS is usually managed ineptly, mainly to generate brokerage income, an analysis of the performance of the two Kotak schemes, the Smart Investor Portfolio and the SIGMA Equity Portfolio shows shocking ineptitude. Month after month, these schemes have been making losses while the benchmark indices often posted significant gains. In fact, during periods where the markets were positive, these funds significantly underperformed their benchmarks.
A close inspection of the Smart Investor Portfolio (SIP) reveals that barring a brief period from October 2008 to March 2009, where it performed only marginally better the BSE Mid-cap—its benchmark index—the scheme underperformed its benchmark every single month from April 2007 to December 2009, a period of three years.
At times, the difference was scandalous. From April 2009 to December of the same year, while the benchmark shot up by 127%, Kotak’s scheme rose by only 37%—a staggering difference of 90%.
The SIGMA Equity Portfolio did even worse. From April to December of 2009 the benchmark, the BSE 200, posted 91.2% returns, but the scheme inched up by only 8.7%.
A pattern seems to emerge from the data. At the start of every major rally, the manager had most of the assets, at times even 85% in cash, only to sit out the bull run before realising that he might have made money by actually investing in the markets instead of watching from the sidelines. For example, in March 2009, at the start of a 120% bull run lasting months, the manager of the SIGMA Equity Portfolio had 77% of the funds in cash, increasing it to 95% over the next few months! This atrocious ability to neither buy the right stocks nor read the market correctly leaves one agape.
When the aggrieved investor complained to Kotak, the company stated, “It can be observed that most of the underperformance in portfolios is a result of high levels of cash, in the portfolio during Q2CY09 during the election time, maintained to protect portfolios in case of adverse election results. The decision to protect and de-risk the portfolio by remaining in high levels of cash during the June’09 quarter, in which the markets went up significantly, has reflected on the portfolio performance.” Sounds academic to us but utterly irresponsible to the investor who has lost lakhs.
Moneylife has copies of the communication between the investor and the company. When we approached Kotak Securities to understand what the portfolio manager was smoking, we received a similar bland, offhand reply. “In the April-June 2009 quarter, the Sensex went up by 49.49% and BSE Mid-cap by 71. 72%. Since we had taken a conscious call to adopt a defensive strategy of being under-invested, the performance of portfolio compared to benchmark started underperforming. As on 31 March 2009 the portfolio was not fully invested and had a major portion of the same in cash to be invested. We had communicated to our clients about the fact that the equity investment in these portfolios was less,” said the spokesperson. The company cites macroeconomic reasons behind its strategy of under-investing during March.{break}
All this is a far cry from the sales literature of broking firms that entice you to invest in their PMS. “Portfolio Management from Kotak Securities comes as an answer for those who would like to grow exponentially on the crest of the stock market, with the backing of an expert,” reads the Kotak marketing pitch.
The only exponential growth seems to be in the losses that they have made. Kotak claims that “to understand the dynamics of various asset classes and investment options we use the best talent in the industry to come up with cutting-edge products.” This looks like pure snake oil. Investors will find it hard to understand how the “best talent in the industry” could make absurd judgement calls so as to lose a large chunk of capital in a period that has been hugely rewarding to investors.
In its sales brochure, Kotak states that their portfolio managers all have an average experience of over nine years in the equity markets and boasts of a research team with an average experience of five years. With such talent and experience, the Kotak team seems to be following two simple rules that take retail investors to ruin; One, “buy high and sell low”, and two, “chase market momentum too late”.
While making losses is perfectly natural in the equity markets, making such losses and under-performing the benchmark by such a huge margin consistently is pathetic. To add insult to injury, Kotak charges high fees for managing money under PMS. Indeed, the investor could have got a much higher return by investing in an index fund and wouldn’t have had to pay the high management fees charged by PMS. Incidentally, after some investors made some noise, Kotak has offered to refund the management fees. This could not be independently verified, however.
While the scheme was doing so badly, the investors were provided detailed quarterly reports, showing just how much money they had lost. Investors could see in minute details, the story of their sinking portfolio unfold.
In the quarterly reports sent to the customers, Kotak took great care to present the data in a detailed manner, with elaborate graphs, charts and tables, all trying to window dress the basic fact that the investor was losing money.
Kotak Securities is not the first company to have messed up PMS. Virtually every single broker is guilty of this. Some other broking companies do far worse. But nobody becomes wiser because there is no public disclosure of PMS performance.
Indeed, Moneylife is keen to compile the data about PMS and invites you write to us about the details of a scheme’s performance—whether good or bad. Email us at [email protected]
“Our Defence Production Policy (DPP) is evolving over the years...But at the moment we feel (the) Indian defence sector is not matured enough...not ready to absorb more FDI in defence sector”, defence minister A K Antony said
Defence minister A K Antony today ruled out for now any change in the defence production policy to raise the Foreign Direct Investment (FDI) from existing 26% to 100% as suggested by the commerce ministry recently, reports PTI.
"At the moment it (policy on FDI in defence) is 26%. Our Defence Production Policy (DPP) is evolving over the years...But at the moment we feel (the) Indian defence sector is not matured enough...not ready to absorb more FDI in defence sector. We feel that time is not right to further expand it," Mr Antony told reporters on the sidelines of the Navy Commanders Conference in New Delhi.
The defence minister said initially, there was 100% monopoly of Public Sector Undertakings (PSUs) in the defence sector, but that policy was changed over the last decade to first allow 100% private participation and later permitting 26% FDI in the defence industry.
But, the 26% FDI policy notwithstanding, the defence ministry would consider allowing more than the prescribed FDI in the sector "on a case-to-case basis," he added.
"Ultimately, forever I can not rule out (higher FDI). On a case-by-case basis, we will allow more FDI in defence sector," he said.
The commerce ministry had recently brought out a discussion paper that called for allowing 100% FDI in the defence sector, a demand forcefully made by foreign players who are eyeing the over $50 billion Indian defence spending expected over the next five years.
"Commerce ministry has brought out a discussion paper only. The commerce minister himself said it is a discussion paper. We can discuss. There is no problem. You should not think there is a clash (between the two ministries)," Mr Antony said.
He said the annual review of the DPP was in progress and in the next round of DPP amendments, his ministry would give more emphasis on Indianisation to strengthen domestic defence industrial base.
"Not only the PSUs, we will give more space to the private sector also. So by combining the resources and capacity of the PSUS and the Indian private sector, we want to enhance the capacity of Indian defence sector.”
“This year, in the coming edition of DPP, our priority is to strengthen the Indian defence industry," he added.
To another question on the environment ministry asking for a moratorium on new shipyards along the coast due to ecological considerations, Mr Antony said the priority was modernisation of the Navy and Coast Guard by providing its more ships and vessels to enable it to meet the increasing threats from the seas and the coastal areas.
"Whatever is needed to expand the capacity to provide more ships and vessels to the Navy and the Coast Guard... whatever effort is needed, we will make. We must modernise the Navy at the earliest to enable it to meet the increasing threats from the seas and coastal areas as fast as possible," he added.
xaviour
9 years agoTerrible attack by police on whistleblower ! Police acting like private militia, going berserk and arresting family members, aged mother, sister in law, any family member
http://timesofindia.indiatimes.com/India/Punjab-cops-hound-whistleblower-family/articleshow/6144969.cms
Shocking. But for India this is just every day police atrocity.
2nd world and 1st world countries are shocked and even their journalists do not believe that India is like this.
anne
9 years agoDear Sirs, kindly post and comment on the final ruling (16th June ?). Thank you.
NMN
10 years agoI agree with Girish Purohit. What about hundreds of cases of whistleblowers where the harassment is through use of police complaints ? Should the victims approach the same police ? That can not be practical.
In other cases where powerful people are behind the harassment.
For example the case of this http://www.mumbaimirror.com/article/15/20100415201004150444035498c0a203/Ecole-Mondiale-staffer-arrested-for-defaming-exBombay-HC-judge.html
Ultimately there is no remedy for harassment but the message "don't take pangas with these high and mighty people".
The system cannot change so easily by one or two court rulings.
Girish M.Purohit
10 years agoI do not think that this order will effect unless and untill politician will take interest. This problem created by politicians only and they are totally involved in this game and they only support these Gundas'.