13 November 2009

Media shames itself - SEBI Board misconduct

If you thought the media in India was fearless and brave, think again. If you thought the new media was even more brave, think twice over.

The government of India appointed the present incumbent Chairman of SEBI, C.B. Bhave in February 2008. There was a cloud over his appointment as there was an on going proceeding against the entity he led NSDL by the regulator, and in the past the regulator had passed several orders against NSDL for negligence arising out of the infamous IPO scam. Several orders were pending against NSDL at the regulator itself. The government selected the Chairman and for the ongoing action, decided that the cases would be decided by an independent panel of members and the Chairman would recuse himself from such proceedings.

After many months of indecision, an independent panel of non-whole time members was formed comprising of Mr. Mohan Gopal (head of the National Judicial Academy) and Mr. V Leeladhar (deputy governor of the RBI) to decide the cases pending against NSDL (and others). The panel came to a decision on the 4th of December 2008. All orders once signed by the appropriate authority are automatically put up on the SEBI website. I am not aware of a single exception to this rule. In addition, for obvious reasons of natural justice, the order has to be served on the parties. Neither was done.

This suppression was highly successful till the Times of India came out with an expose of the facts (see also ET) on the 24th March 2009. The ToI article quotes extensively from one of the two member-authors of the order. I blogged about this then. Despite the expose, SEBI continued to suppress this order, claiming the Board of SEBI was 'reviewing' the order. In the meanwhile, a person claiming to be affected by the IPO scam filed a public interest litigation (writ petition) in the Andhra Pradesh High Court. Several right to information applications were also filed with SEBI trying to pull out the order. It appears the same were denied on the grounds that the matter was pending investigation (though the fact finding ended several years back). The Times of India ran another highly damaging piece based on the PIL: Sebi mum on Bhave's interest conflict. After a full 11 months (only a week after the ToI's second article of 31st Oct 2009), the SEBI Board rejected the order as being beyond the powers of the panel. It may be recalled that one of the co-authors of the report is Dr. Mohan Gopal who has founded an academy to teach judges and is commonly known as an eminent jurist. What is most fantastic about the setting aside of the order is that the SEBI Board does not have the power to set aside its own orders in review. It has not done such a review even when relatively junior officers of SEBI pass orders in a quasi judicial capacity - in fact it has rightly not been done by SEBI in its 17 year history.

Clearly, the chapter in this dark period of SEBI is not yet closed and courts will finally decide on the fate of the action, though I am not particularly optimistic because everyone would have moved on by the time a decision arrives. Be that as it may, the role of the media has been even more shameful than the role of the Board. The dark chapter has virtually been blanked out. See the rather timid reporting of this big scandal in the major media - as if this was just another setting aside of an order of SEBI here and here. Most of the media has not even reported this, not even timidly. The sole exception to this has been the Times of India (and Economic Times which re-ran the piece) which is often wrongly vilified as being run by managers rather than by editors.

Even more surprising is the even more silent parallel media or new media of blogs and twitter news. The new media, comprised of millions of people writing about billions of issues has blanked the news even more totally.

Remind me again - am I in India or Myanmar?

1 comment:

Anonymous said...

A little googling would reveal that other media have indeed been more active. Articles from Moneylife Magazine were used in the public interest litigation in Hyderabad, but our eminent blogger, ready to shame the media has not noticed!