Sucheta Dalal :Guilty or not guilty?
Sucheta Dalal

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Guilty or not guilty?  

Jun 21, 2004

By Sucheta Dalal

A curious June 12 order of the Securities and Exchange Board of India (Sebi) is raising eyebrows in the capital market. On December 31, 2002, SEBI had barred 50 odd entities from the capital market pending investigation into the manipulation of Global Trust Bank shares. They included persons and entities of the Ramesh Gelli family, Ketan Parekh, Ashok Mittal and a top pharma company. The matter was to come up before the Securities Appellate Tribunal last week. However, on June 12, SEBI suddenly modified its orders against 14 of these entities and seemed to let them off. These were —20th Century Securities, Ashok Mittal, Ashok Mittal & Co, Brentfield Holdings, Claridges Investment & Finance, Coral Reef Investment company, Kallar Kahar (CSFB sub-account), European Investments, Far East Investments, Kensington Investments, Nishkalp Investments, Phulchand Sons Investments, RP&C International (A/C Coral Reef Investments) and Vidyut Investments. Sebi’S curious order says investigations against these entities are complete, so the interim ban on their trading is no longer required. At the same time, it says, no final order has been passed because it needs to analyse its findings. The market regulator simultaneously insists that ‘‘the culpability or otherwise of the above entities needs to be proven under appropriate proceedings,’’ therefore ‘‘revocation’’ of the interim order ‘‘shall not in any way be construed as exonerating’’ them.

Top Sebi officials say ‘‘show cause notices have been issued to the five entities for taking final action.’’ The market, however, see the Sebi action as a clear about turn. After all, isn’t four years long enough for the market watchdog to make a final decision?

Defaulters beware

A real-estate intermediary called up agitatedly last week. ‘‘Everybody is worried about something called ‘sibi’’’ he said. ‘‘It is tracing payment records of every individual.’’ He said four banks had turned down a Pune businessman’s housing loan application based on this payment data.

He apparently has a history of frequent defaults on his credit card payments. It turns out that ‘sibi’ is actually CIBIL — the Credit Information Bureau (India) Limited, which collates individual credit information. Clearly, CIBIL is beginning to make its presence felt, and this is bad news for individuals who thought nothing of running up huge defaults on credit card payments and delaying loan instalments. Now these defaults are all permanently recorded by CIBIL and shared with member banks that want to verify a borrower’s credit history. Henceforth, it would be good business to be real careful about those repayments.

Old wine-new bottle?

An Indian Investment Promotion Board is reportedly likely to be one of the big budget initiatives of Finance Minister P.Chidambaram. But dig up Chidambaram’s 1996-97 budget and you realise that he is big on such initiatives. He had then set up a Foreign Investment Promotion Council (FIPC), headed by Narayanan Vaghul, which went nowhere. It was meant to promote foreign investment by wooing potential investors. Will the Indian Investment Promotion Board be FIPC by another name? Or, will Chidambaram finally manage to scrap that Foreign Investment Promotion Board (FIPB), which he has also wanted to do since 1996? The Disinvestment Commission was also created in the same budget; it was headed by G.V.Ramakrishna and made waves until the United Front government clipped its wings. Chidambaram has said in 1996, ‘‘Revenues generated from such disinvestment will be utilised for allocations for education and health and for creating a fund to strengthen public sector enterprises.’’ But neither his government nor the BJP-led National Democratic Alliance took the important step of divorcing revenue generated through disinvestment from the budget exercise. Will Chidambaram now bargain support for disinvestment from the Left by going back to the 1996-97 model he had proposed?

Warrior lost

The Enron imbroglio continues to haunt Maharashtra and the government of India, but anti-Enron activism has been dealt a body blow with the untimely demise of Pradyumna Kaul on June 14. Kaul, an IIM Kolkata alumnus, was probably the most knowledgeable activist in the battle against Enron and its main strategist. Whether it was briefing the politicians who supported the anti-Enron movement, strategising legal battles against powerful adversaries, making technical presentations to numerous inquiry commissions, ripping apart private sector tariff claims before the Maharashtra Electricity Regulatory Commission or providing constant updates to the media — Kaul was a one-person resource centre. But few knew his deep involvement with the Narmada Bachao Andolan, until an inconsolable Medha Patkar, with tears streaming down her face described his role as a strong pillar of support.

The biggest losers in Kaul’s death are ordinary people. To stand up to the private sector’s galaxy of highly paid experts advocating the increased privatisation of utilities such as water, electricity, roads requires a combination of guts, knowledge and technically savvy. Kaul had what it took, and there are very few like him around.

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-- Sucheta Dalal