Apart from naming a few expendable brokers across different stock exchanges and confirming that Ketan Parekh (KP) was truly at the centre of the scam, the JPC report has named only one name that of the former Union finance secretary Ajit Kumar. That itself was so unfair and incongruous that within a day after the report was released, JPC chairman Prakash Mani Tripathi told the press that it had slipped in by mistake only confirming the JPCs strategy of sticking to generalisations.
The report starts by pointedly dismissing the Securities and Exchange Board of India (Sebi) and the Reserve Bank of Indias (RBI) attempt to downplay the scam by declaring that persistent and pervasive misappropriation of public funds falling under the purview of statutory regulators and involving issues of governance becomes a scam.
Having done that, its investigation does nothing to pinpoint specific issues that led to collective regulatory failure.
For instance, the report says when stock markets were crashing in 2001, KP had helped himself to a phenomenal Rs 4,500 crore from corporate houses (Rs 3,340 crore through direct diversion of funds and Rs 1,300 crore of undelivered shares). This is more money than is required to build a good-sized steel plant and substantially more than what the government paid to bailout the Unit Trust of India (UTI) in 1998.
Could this have happened without the heads of several banks and industry houses breaking rules to divert money to the broker Could it have happened unless the regulators were sleeping at their jobs or were persuaded by powerful politicians to look the other way But the JPC has decided to be like the three monkeys hear no evil, see no evil and speak no evil.
This is reflected in the dubious unanimity of its report. Nearly a dozen political parties were represented on the JPC, but amazingly nobody raised an objection to the wishy-washy report not even the moralising leftist MPs. In 1992, the JPC had achieved a farcical unanimity, but several notes to the report made the dissenting views on the role of key politicians public. Gurudas Dasgupta of the CPI, first signed the unanimous report, attached his signature to a couple of notes and then developed a conscience and wrote an alternate scam report that targeted a couple of individuals that the official report had refused to name.
Yet, in 1992, a Somnath Chatterjee and a Gurudas Dasgupta at least improved the quality of interrogation with their questions. This time there was no such spark from the left parties either. Even Mani Shankar Aiyer was apparently persuaded not to submit a separate chapter on Shankar Sharma and First Global Stock broking. Did he change his mind when he saw that the report was so spiritless that it didn't even merit a decent dissent
Never during the 20 months did the JPCs questions ferret out any information that was not already a part of the reports submitted by Sebi, RBI, the Tarapore Committee, the Department of Company affairs or the investigative agencies. Yet, the JPC grumbles that it did not have the benefit of a comprehensive investigation such as the one conducted by the Janakiraman Committee.
If JPC 2001 saw such merit in the Janakiraman Committee of 1992, did it notice that the committee did well because it was a multi-disciplinary investigation team Why has the JPC not recommended that future scams or frauds be investigated by such multi-disciplinary committees comprising officials of unimpeachable integrity In fact, the JPC ought to have set up such a sub-committee to assist it in its task, in the early stages of the investigation. Had it done so, it would not have had to deal with incomplete or incompetent reports from individual regulators.
It is interesting to examine why and how the JPC produced such a unanimous report. On the face of it, one would say that the Bharatiya Janata Partys simple trick of repeatedly harking back to 1992 worked wonderfully in its favour. The JPC members from the ruling party first put the opposition on the defensive, by righteously pointing out that there was hardly any follow up to the 1992 JPC report. Having established that no political party could claim moral superiority, it demonstrated that there is honour among politicians. So there was no mention of allegations against former Prime Minister P V Narasimha Rao (the Goldstar case involving his sons and the Harshad Mehta allegations of bribery), which were never investigated. And Romesh Bhandaris (then Governor of Tripura) fake affidavits in defence of Harshad Mehta that formed part of the notes to JPC 1992 were ignored again.
Even in respect of UTI, the long and rambling commentary going back to 1992 and the farce of questioning former finance ministers, Dr Manmohan Singh and P Chidambaram was meant to establish that the rot in UTI goes back a decade. Naturally, nobody wanted to probe the connections of UTIs former chairman P Subramanyam to some of the most powerful politicians in power now. More pertinently, they did not even want Subramanyam in a position where he or his lawyer would be cornered into naming those who supported his dubious dealings and frequently called him to influence his investment decisions.
Forget about politicians, The JPC has made no attempt even to pin individual responsibility on those regulators whose proximity to the accused brokers and companies was an open secret. At the end of 20 months, all key questions are left unanswered for paucity of time. Sebis role, if any, in trying to hush up the Calcutta Stock Exchange default has not been probed. A senior Sebi official has been given an extension, although his only contribution is the failure to establish any connection between KPs market manipulations and his three favourite corporate houses.
Having left several key issues to the finance ministry, the JPC has sanctimoniously ordered it to present Action Taken Reports every six months, which again is a repeat of 1992 and may meet the same fate.
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