How not to find a chairman

Political ineptitude hampers Sebi’s search

A not-so-secret committee appointed by the government is searching for suitable candidates to head the Securities and Exchange Board of India with little success. So far as anybody knows the committee is looking for a chairman, two full-time board members and one public nominee to replace Kumarmangalam Birla who is set to complete his term. The provision for a second full-time board member is part of an amendment to the Sebi Act, which is to be promulgated shortly. Enlarging the board of the capital market’s watchdog body is certainly welcome, but why are so many people turning down the job? Because the sequencing of the search is all wrong. Sebi’s reputation as an effective supervisor has taken a huge knock in the last few years, but nobody is quite sure if the government really wants a strong regulator. Thus, there are no takers for full-time board membership unless the new chairman is announced. The search is also handicapped by the fact that the chairmanship is not only a powerful job but its upper age limit of 65 years makes it a cushy sinecure for influential bureaucrats on the verge of retirement. Naturally, younger and more deserving candidates are being bypassed and the main contender for the post is a bureaucrat from the finance ministry.

If every competent and suitable candidate has turned down the full-time member’s post, the reasons are not far to seek. Firstly, some of those who have been offered the post deserve to be the chairman rather than just full-time board members. Secondly, unless the chairman is dynamic and wants to revitalise the organisation, the post holds no challenge. Otherwise, a full-time member is just a glorified executive director. Prof J R Varma’s decision to quit Sebi and return to academics just a year after he was made member is a powerful indicator of the rot in Sebi. But so far, the government has shown no signs of noticing it, or the simmering discontent, corruption and lack of clear personnel policies at Sebi. If that were not enough, there are new questions being raised everyday about its supervisory and punitive powers under the Act,with the government showing no sign of plugging all the loopholes and empowering the regulator. Had the Joint Parliamentary Committee investigating the scam of 2001 been serious about recommending a proper clean-up, fixing responsibility and forcing better accountability, the government would have been under pressure to find suitable candidates to head Sebi. But as things stand, we have a completely disinterested JPC and investors seem destined to get another political appointee to head Sebi.