Fairgrowth’s employees continue to seek justice, while investors fret about SEBI’s slow pace, while ONGC’s mystery investor baffles the market. Read on… (March 14,2004)
By Sucheta Dalal
After several takeover attempts, Karsanbhai K.Patel (not as in Nirma) acquired the high profile Fairgrowth Financial Services (FFSL) that was shut down during the 1992 Securities Scam. He hoped to make his Rs 5 crore investment profitable, based on FFSL’s claim that it was solvent when the Reserve Bank forced it to close down. Patel was allowed to take the company, but without touching properties and assets that were attached by the Custodian under the Special Court Act. Since then, Fairgrowth’s hapless employees have received one nasty shock after another. In April 2002, the Custodian filed a contempt petition against Patel for transferring money from the staff provident fund as well as various dividends receivable by Fairgrowth into a new bank account and ferreting it away. While that case has languished, FFSL employees have been knocking every door for justice. In December 2003, K.Murali Krishna, a senior FFSL executive, filed a petition before the Rajya Sabha Petitions Committee over the violation of public policy on Employees’ Provident Fund by Fairgrowth. He has also raised the larger issue of amending provident fund legislation to regulate the functioning of the Provident Fund Trusts established by private companies. The urgent need for such an amendment was also revealed by the collapse of another finance company called Home Trade, where substantial sums from the Seamans’ Provident Fund were diverted to the company. Unfortunately, the ruling coalition has dissolved Parliament and called early elections forcing the beleaguered FFSL employees to wait for the new government to consider their plea.
When GN Bajpai took over as chairman of SEBI (Securities and Exchange Board of India), he made a determined effort to improve its operational efficiency. All officers were asked to submit a fortnightly report detailing cases pending with them and those that were disposed off. But officials, who hit on the trick of raising fresh issues and asking new questions just before the fortnight is up, have derailed the system.
This way, they delay clearances but do not get into trouble with the chairman. Consequently, even simple matters such as clearing the increase in brokers’ authorised capital or registering new Depository Participants (DP) (especially those of Central Depository Services Ltd) have been delayed by as much as three months or more. Worse, follow up queries are often met with astonishing rudeness. One broker, wanting to check when his DP application would be cleared, says that he was about to sit down when the senior SEBI official he was meeting barked at him and said, “What are you doing? Who asked you to sit down?” Such stories abound these days, but intermediaries don’t dare to complain for fear of reprisal by the officer. But if SEBI wants to attain its avowed goal of becoming the world’s best capital market regulator, the rest of the organisation will have to move at the speed of the Chairman.
On the day ONGC’s mega divestment offer opened for subscription, somebody deliberately spread a rumour that Warren Buffet had bid a cool billion-dollars. The renowned investment guru quickly issued a denial and scotched whatever nefarious game was afoot. Was the rumour just a harmless trick that can be passed off as media exuberance? Or was it a shrewd attempt to manipulate subscription and lure investors to apply for ONGC shares? It is a fit case for the Intelligence Bureau Chief to find out. Secondly, if Warren Buffet wasn’t the big bidder, who put in the first few applications to ensure oversubscription in minutes? The answer is of immense interest to investors. Meanwhile, the bazaar grapevine says that a large industrial group with interests in oil and petroleum has bid for ONGC in a big way. This leads us to another question — why would the group want to block money in a PSU offering just five per cent of its equity? This time, the grapevine has two answers. First, that it was pulled up for manipulating the secondary market and sought to appease the powers-that-be; or, that the ONGC scrip would be made to see some rollicking times before the group takes back its application money and more by booking a huge profit. Investors are now wondering whether the huge run up in prices during the closing 30 minutes on Friday would set the trend for next week, or if heavy selling of the earlier days will continue.
Tailpiece: The Supreme Court has again come to the rescue of Indians –this time it is cricket lovers. But angry discussions on Internet e-groups make one wonder why the Information & Broadcasting Minister cannot get things right about the broadcasting of major sports events. Even his experiment with the Conditional Access System (CAS), was rejected because subscribers are tired of the blackmail and harassment by cable operators, service providers and broadcasters. But all we have today is a temporary reprieve.