Following a complaint by a former chief executive of High Mark, the Vigilance Commission asked RBI for a factual report on granting licence to the credit bureau
The Central Vigilance Commission (CVC) has sought a factual report from the chief vigilance officer (CVO) of Reserve Bank of India (RBI) in granting licence to troubled and cash 
strapped High Mark Credit Information Services Pvt Ltd (High Mark).
This follows a complaint from Ajay Kohli, former chief executive of High Mark, who earlier tried to raise the issue of violation of Credit Information Companies Regulations (CICR) Act, 2005 (CICRA) as well as Companies Act, while appointing Prof Dr Anil Pandya as executive chairman of the credit bureau.
The issue was first raised by Siddharth Das, former chief operating officer (COO) of High Mark, before the company board. But the High Mark board apparently ignored it. Subsequently, Das sent a legal notice raising this issue.
According the complaint filed by Kohli to the CVC, Dr Pandya, a US citizen promoted High Mark while being a full time professor employed at that time with North Eastern Illinois University at Chicago.
"He (Dr Pandya) did not bring any significant equity (his cash contribution to the equity capital of high mark is only Rs10 lakh) or any expertise in management of credit information bureaus, yet he was granted a license by the RBI. It is to be noted that large domestic or global corporations with relevant experience promoted the other three bureaus while Dr Pandya had no prior experience in managing a business let alone a credit information bureau," Kohli said in his complaint.
Dr Pandya has an employment contract with High Mark under which he was to devote his full time for the services of the company and was paid a salary of Rs60 lakh per annum. "However," Kohli said, "over and above this, he was also entitled to a huge sum of money (Rs12.5 million or about $230,000) towards 'procurement of the in–principle license from RBI' (clause 4(b). Further payment of Rs30.25 million (around $560,000) was also made to him under clause 4(c)."
"It is evident that payment of this huge sum of money was directly or indirectly towards 'costs' of procuring the license which means that either the license has been procured by Dr Pandya through corrupt means or he has siphoned off this money from High Mark under the pretext that this money was needed to be paid to someone. In either case, he is guilty of corrupt and criminal offences," Kohli alleged in his letter.
According to the former chief executive of High Mark, since the reputation of the RBI was at stake, he think it was imperative that the CVC immediately investigate as to why this payment was made for acquiring a license from the RBI which is done in the normal course of business if the applicant is eligible?
"Who were the real beneficiaries and whether there has been any irregularity in grant of this license to High mark. This is also a matter of concern as the funds belong to the shareholders of High Mark who are public sector banks, including State Bank of India (SBI), Punjab National Bank (PNB) and SIDBI," Kohli asks.
High Mark never appointed Prof Pandya on a full-time basis. The prefix ‘Executive’ before chairman was supposed to give the impression that he is a full-time employee in the nature of a CEO. Even as Dr Pandya continued to work on a part-time basis, the credit bureau also did not appoint any whole-time director or managing director. This clearly violates Regulation 9 (2) of the CICRA for which the board should be made responsible.
On 4 October 2012, High Mark’s former COO, Siddharth Das, sent a legal notice to the company demanding his dues. He also alleged serious violation of the CICR Act in the appointment of Prof Pandya as executive chairman.
Following the notice, Kohli, High Mark’s the then chief executive sent an email on 18 December 2012 to the company’s board of directors urging to deliberate in the alleged violation of CICR Act and Companies Act. “It is evident that Prof Dr Pandya was never appointed on a whole-time basis and continues to work on a part-time basis. As the company does not have any other whole-time director or managing director, regulation 9(2) seems to have been clearly violated. Das has already threatened to take this issue to Court as well as the RBI. Even if he does not, I feel it is my professional and moral duty to point out the illegality being committed by the Company to the Board for appropriate action to remedy the violations,” Kohli said in his email to the Board.
He said, “…there are only two options to cure the illegality for the future. Either Prof Dr Pandya should resign from the position of Executive Director or the Board should appoint a whole time director. This needs to be done as soon as possible. Otherwise, the RBI License would be under threat of cancellation/suspension. Legal advice should be sought as to the action to be taken for the past non-compliance.”
As per Regulation 9(5), the Reserve Bank of India (RBI) can supersede the company board for failing to follow Regulation 9(2) and also may cancel or suspend licence of High Mark. But so far nothing of this sort has happened.
One of the independent directors of High Mark was Vepa Kamesam, a former deputy governor of the RBI. In December 2012, he resigned from the High Mark board. Mr Kamesam was one of the four directors who along with Dr Pandya received 70% of the employee stock ownership plan (ESOP). Mr Kamesam was allotted 1.63 lakh shares in the credit bureau as ESOPs.
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There is no moral in this leader and company. Another example of how stupid NRI's bites the dust. I browsed through their site and found that this guy (Pandya) was cheating right royally under RBI. What is RBI gonna do? Now he is planning to sell HighMark. Does he contributed anything in building it? Seeing the trail of articles in moneylife, I don't think so. It could very well have been the case of corporate cheating. Does he have the guts to reply to this article? Is he male enough to come out in open and explain what happened? Or is he like a coward gay who sleeps in the cozy bed of money he made thru this illegal corporate activity.
Also, I want to ask RBI why do they allow such people to have license in first place. If the license was granted looking at the team of people then, the team of people is what makes the company. When the key people leave then let the company close and that would be a lesson to such rats like Pandya. Sorry... I don't know how he got his DR title but I don't think he deserves it.
Alas... who knows... RBI may come up with some legally cornered logic of how everything is fine and once again a stupid NRI will be allowed to loot the money from India and walk away. Moreover, I was aghast on seeing the board of director names. Are they really doing anything or just enjoying their free booze and dinner?
Lastly, Mr. Experian and Mr. Crif - Atleast you have bigger brands and doesn't want to get associated with such filthy stuff. What happened? Let this company die. You can as well get this business much more cheaply. Are your investment bankers out of mind to buy this shit?
This comment may please be sent across to RBI CVC Kaza Sudhakar.
The payment of the so-called "charges" on account of procurement of licences absolutely smacks of corruption a la Niira Radia!!
That big wigs and PSU banks allowed it to happen raises serious doubts on credibility and the eligibility of the appointee and is indeed a fit case for the RBI CVC to look into. The facts and circumstances are crystal clear. It has to convey the message that such malpractices are a strict NO-NO.
The payment of the so-called "charges" on account of procurement of licences absolutely smacks of corruption a la Niira Radia!!
That big wigs and PSU banks allowed it to happen raises serious doubts on credibility and the eligibility of the appointee and is indeed a fit case for the RBI CVC to look into. The facts and circumstances are crystal clear. It has to convey the message that such malpractices are a strict NO-NO.