Who pays for the banking ombudsman's infrastructure; should the judiciary step into the cricket broadcast dispute and what is happening in the Ambani empire...
By Sucheta Dalal
Like the Reserve Bank, the Securities and Exchange Board of India (Sebi) has also proposed to set up an Ombudsman for the capital market, so that small investors can get a quick hearing and swift redressal of their grievances. Sebi is now looking for funds to create the necessary infrastructure and has sought a contribution from the Investor Education and Protection Fund (IEPF) which has nearly Rs 230 crore in its kitty. While the ombudsman would certainly help resolve investors’ grievances, there is a catch. A group of consumer and investor associations who met at Ahmedabad at the end of February were of the strong view that since IEPF is carved out of unclaimed dividends, the money must only be used to fund investor programmes and not by the regulator. While Sebi does need to fund the Ombudsman’s infrastructure, these activists felt that the money must come from fines and penalties imposed on capital market intermediaries and traders, under Sebi regulations. An amendment to the Sebi Act has hugely enhanced the regulator’s power to levy hefty penalties but curiously enough, a slew of recent Sebi orders have chosen to bar wrongdoers from the capital market instead of imposing deterrent monetary penalties. Yet, all over the world, financial penalties are considered the most effective deterrent against financial crime.
If the holy land of Medina broke with tradition to allow Konkan Railway officials to examine the feasibility of a Skybus project for pilgrims, at home, the corporate sector is also going way out to help make it a success. The Skybus test run schedule is delayed a little because a leading engineering company got cold feet over its contribution and backed out. Skybus executives then roped in five other companies to chip in and have even managed to save 15 per cent on civil work. They also received a boost when Ratan Tata magnanimously gave the project free TMT steel bars at a time when steel prices have soared sky high. Grasim and ACC are supplying it cement at 50 per cent cost, while Jindal Steel is also providing rail steel at 50 per cent of market price. An Austrian company, Elin EBG has chipped in with three of the latest Ph AC motors free of cost. Konkan Railway Managing Director B Rajaram says that India has still to make motors as efficient as these. With all the help and goodwill, the charged-up Skybus team has made up some of the lost time and hopes to conduct its test run at the end of April. But the team still needs all the support it can get, and continues to battle various hurdles thrown in its efforts.
Sanctity of contract
They did it in connection with Enron and they are doing it again. Newspaper editorials have waxed eloquent about the sanctity of Ten Sports’ contract to broadcast matches played in Pakistan and have criticised the judiciary for meddling. While they are right in arguing that Doordarshan and all Indian cable service providers ought to have worked out a commercial agreement with Ten Sports, let’s not forget a few pertinent points. First, that Indian viewers had already missed two minor matches because no agreement was forthcoming. Secondly, until the eve of the first One-Day International, there was no agreement.
Third, Ten Sports has a record of blanking hapless cable viewers from major international sporting events while trying to extract higher payments from cable service providers. It has shown scant sympathy for the fact that paying viewers are deprived of their legitimate right because of its dispute with operators. Fourthly, without India’s one billion cricket-obsessed viewers, Ten Sports broadcast rights for matches played in Pakistan would have been just a fraction as profitable. If cricket is readily acknowledged as a national obsession, then public interest as well as law and order considerations make it necessary for the judiciary and the government to step in, especially when it was clear that business considerations were not leading to a practical resolution of the problem.
Tailpiece: A knowing wag makes this interesting observation. Have you noticed, he says, that all the Reliance Energy advertisements carry the tag line ‘A Dhirubhai Ambani Enterprise’. However, this is not true for the rest of the Reliance group. For instance, Reliance Infocomm, which was the first to exploit Dhirubhai Ambani’s brand appeal with the mere papa ka sapna campaign and Dhirubhai Ambani Entrepreneur scheme, doesn’t carry the same tag line. Is it merely an oversight, lack of a clear group policy or a deliberate difference? For those who don’t get the picture, Reliance Energy is almost exclusively managed by one Ambani brother and Infocomm by the other.