[Image taken from here]
A PIL filed in the Supreme Court earlier this year only emphasizes the irregularities in the appointment of the top brass of the securities regulator, SEBI. The PIL filed by former Chief of Air Staff Mr S Krishnaswamy and retired police officer Mr Julio Ribeiro alleges that the rules for the appointment of the SEBI Chief are not fair and give the Finance Minister unbridled power. It challenges the appointment of U K Sinha as the chairman of the Board.
The amended rules (copies of which are not available) empower the Finance Minister, as against the Finance Ministry to nominate two members to the Selection Panel of the SEBI top members. This nomination is not governed by any guidelines or regulations, and as a result the nominees do not need to have any minimum qualification or experience. The PIL alleges that this compromises the role of SEBI as the market regulator and affects its independence. What the PIL also seeks is an explanation to the concerns raised by Mr. K M Abraham in a letter to the Prime Minister . This letter has highlighted various instances where the Chairman of the Board has been pressurized by the Finance Ministry to take actions according to the directions of the latter. [An RTI filed in this regard highlighted that the letter was forwarded to the Finance Ministry. A copy of the RTI and the letter is available here]
In its reply, the Finance Ministry has denied that the rules impede the independence of the regulator in any manner. The affidavit filed states that it was only in 2009, under Pranab Mukherjee that a statutory system was put in place for the selection of the chairman and other Board members. This assumes importance in light of the fact that the past record of the appointment and removal of SEBI chairpersons has been anything but transparent and fair. [For example removal of GV Ramakrishnan on his implicating the then PM’s son]
The Government also stated that the selection was proper since the Committee selected Sinha as the first candidate in the merit list. This might boomerang for the government since Sinha was also the first choice back in 2008, when Bhave was appointed as the chairperson. The Finance Minister however decided to overrule the committee’s unanimous decision and instead appoint Bhave, another instance of the arbitrariness in appointing SEBI top officials.
The government also alleged petitioners’ mala fide intention to pressurize it to reinstate C.B.Bhave as the Chairman of the Board. Bhave has since distanced himself from the entire issue.
The Supreme Court has acknowledged the importance of the matter, and has set the next hearing date to be November 22, 2011.
http://articles.economictimes.indiatimes.com/2011-11-22/news/30428981_1_market-regulator-sebi-uk-sinha
ReplyDeleteThe SC has trashed it.
Dear "takethatback"
ReplyDeleteThank you very much for your comment.
However, while thrashing the PIL, the Supreme Court did permit the petitioners to file another application focusing on the issues of the regulator's independence.
Also, it is interesting because the Court had earlier refused to hear a PIL by the same petitioners on the same grounds. The fact that the SC has allowed yet another application to be filed reflects that the SC itself smells foul play.