|Watching the watchdogs|
|Monday, 15 August 2011 00:00|
After the plethora of corruption charges, ranging from 2G to CWG, that have dogged the government’s functioning over the past few months, the Central Vigilance Commission (CVC) is now investigating a case that involves both the capital market regulator and the finance ministry. Former Sebi member KM Abraham, whose purchase of a flat was the subject of an investigation by the tax authorities some months ago, has written a letter to the Prime Minister, with a copy to the CVC, alleging that the finance ministry is putting pressure on the Sebi chief to decide cases in a particular manner.
The finance ministry has, for the record, denied the charges to the CVC; it has also forwarded a letter sent to it by the Sebi chief which says the allegations are baseless. In ordinary times, the charges would probably go unnoticed. But these are not ordinary times. Indeed, the Sebi chief’s letter itself is quite extraordinary. He has written to financial services secretary S Gopalan to say Abraham was suffering from a persecution complex, that he appeared to be in a deeply disturbed state of mind and that his behaviour had become erratic because of the income tax probe—if one of the four members of Sebi (including the then chief CB Bhave) has been described as being not fully there by the current Sebi chief, what does it say for the quality of the decisions taken? Two, the fact that Bhave’s income tax returns are now to be scrutinised going back several years is curious. Three, the finance ministry took a decision to give Bhave an extension, even wrote to ask him for his consent and then even as Bhave sent in his assent, the finance ministry formally withdrew its proposal for an extension which had been sent to the Appointments Committee of the Cabinet.
Since much of this suggests there was some kind of pressure on Sebi, even though the current chief denies this is the case, it is to be hoped the CVC comes to a quick decision on the case. The last thing the country needs is for the finance ministry and the markets regulator to remain under a cloud—Sebi’s ability to police the market will be hit by the slew of charges, so the sooner this issue is resolved, the better.