Exclusion from pension fund management - zero bids

If a news report is correct, two bidders (asset managers) for managing the pension portfolio have been excluded because they bid zero, apparently on a legal opinion that a zero bid is not contractually enforceable. This is legally sound, but in reality is highly redoubtable. The right thing to do, was as suggested by the bidders i.e. call them and ask them to bid Re. 1. It is precisely this kind of inequitable and mechanical thinking which causes huge losses to the government and pensioners alike. One basis point of Rs 1,55,561 crores is over Rs.15 crores by the way.

Batman and George Bush - a comparision

If you have seen the new batman movie, this is guaranteed to make you laugh.

Corporate Debt Market - EcoTimes piece

I wrote a piece on the developments of the corporate debt market in the Economic Times day before. I have stated that while a lot has been done by SEBI, much needs to be done by the government to create the proper environment for corporate debt primary issuances and secondary market trades to work out. I have also argued against the Percy Mistry committee report and the R.H. Patil Committee reports' support to encourage an exchange traded corporate debt market. I believe in the theory of 'let a thousand flowers bloom' - i.e. allow both exchanges and Over the Counter (OTC) markets to compete with each other. Taking cue from the equity markets would be a wrong step as the two products (equity v. pure debt) cannot be compared.

Ranbaxy - privileges

Much of the US District Court (Southern District, Maryland) motion by the US Dept of Justice centers around attorney-client privilege and work-product privilege. The two privileges are not well understood in the Indian context, though the attorney privilege is broadly understood and is in fact used without any substantial challenges in Indian courts. The work-product privilege is a more limited privilege but is similar to the attorney client privilege in many respects. I hope to discuss this issue in more detail in a later blog. From a big picture, the attorney client privilege
a) belongs to the clients i.e. only the client can waive the privilege, not the attorney
b) it is possible to waive the privilege
c) before Sept 2001, this was a zealously guarded right of clients and allowed clients to confide in their lawyer without any chance of the lawyer blowing the whistle. Since then, it has been chipped away constantly both by the legislature and the courts there.

According to a press report by DNA, the Ranbaxy issue centers around the US government pressing Ranbaxy to waive all privileges and thus making them disclose fully even though they are not obliged to do so. To the best of my knowledge, waiving the privilege does not create an adverse inference against the client. (By contrast asserting the 5th amendment i.e. right to remain silent, could create an adverse inference against a person).