The Stock Holding Corporation of India Limited (SHCIL) continues to be badly shaken by the arrest of two senior executives by the Kolkata police, in connection with the scam of 2000. Lashmanan Vishwanathan and Rohinton Mewawala got a temporary reprieve in Mumbai, but their luck ran out at the court of the Metropolitan Magistrate on July 5.

They were first remanded to a fortnight of police custody, but when the case came up for a bail hearing again, just two days later, the lady magistrate sent them to judicial custody. There effort to secure bail for the two executives naturally continues and they are expected to approach a higher court this week.

Ironically, the arrest again casts a cloud over the role of the capital market regulator – the Securities and Exchange Board of India (Sebi), whose top brass was extremely close to SHCIL’s discredited CEO R.Jayarmanan Iyer and his co-conspirator S.Ramanathan, who headed its controversial subsidiary SHCIL Services Ltd (SSL). The regulator had virtually okayed a clean chit for the two senior executives, based on a report commissioned by a leading firm of Chartered Accountants. The Kolkata police have written several letters expressing surprise at SEBI’s actions in what they allege amounts to pre-judging their case.

Interestingly, the Reserve Bank of India had also appointed a one-man committee comprising S.Doraiswamy, Ex- Chairman and Managing Director of Central Bank of India to investigate the funds/securities payment implication in SHCIL case. This inquiry too was largely inconclusive.