MUMBAI, Mar 19: Hitting back at CBI for launching an enquiry against him on the basis of an already disposed of I-T probe, former Sebi chief C B Bhave says the agency was working with a “crazy logic” and has ignored the fact that the tax department itself found no merit in the case years ago.
Hinting at certain revelations from his side in days to come, Bhave also accused CBI of indulging in “pick and choose” while registering an Preliminary Enquiry against him and Sebi’s another former senior official in Shah-related matters.
A former Maharashtra cadre IAS officer of 1975 batch, Bhave further said that CBI must probe him if it has any evidence. But, CBI would have to “publicly apologise” to him for tarnishing his reputation if they find no substance, he told PTI in an interview.
When asked whether actions taken by Sebi against Sahara and other corporate entities during his tenure could be linked to the present case, Bhave said, “I have no idea and there is no way of knowing the same unless they (CBI) share something with us.
“Whatever I know is from newspaper reports. They have not shared anything with us and have not contacted us yet.”
The PE has been registered on the grounds that Sebi granted a licence to MCX-SX in 2008 and further renewed it during subsequent years despite an income tax department probe against the applicant entities.
Asked for his comments on CBI Director Ranjit Sinha’s reported remarks that the agency has only registered a PE, Bhave retorted, “They are saying there are no raids or arrests yet. Should we wait to get raided and arrested?”
Bhave, who served as Sebi Chairman for three years till mid-February, 2011, said that “CBI chose to ignore the fact that the I-T department found no merit in its prob against Shah. Yet, CBI chose to file a criminal PE against me”.
On CBI’s assertion that Shah was given undue benefits by grant of licence, Bhave said, “it’s a completely crazy logic that CBI has”, because the licence did not lead into any profits and it was rather granted to create competition.
Bhave has been credited with several path-breaking orders and decisions taken by the capital markets regulator and the CBI move against him has already evoked sharp reactions from many former bureaucrats including ex-CAG Vinod Rai, as also by Union Minister Jairam Ramesh.
CBI registered a PE against Bhave, Sebi’s former whole-time member K M Abraham, as also against Shah-led FTIL and MCX, last week in a case related to grant of licence to MCX Stock Exchange in 2008.
MCX-SX, which was set up by FTIL and MCX, was initially given licence to operate in a limited segment of currency derivatives in 2008, but Sebi refused permission to allow it to act as a full-fledged bourse for years as it was not found to be in compliance with existing regulations for the same.
Incidentally, it was Abaraham’s order in September 2010 that rejected MCX-SX application for a full-fledged exchange, saying it was not in compliance with shareholding regulations and it was not a ‘fit and proper’ entity for such a business.
MCX-SX could launch services as a full-fledged bourse only last year after it met all the necessary regulations and conditions imposed by Sebi.
After a major Rs 5,600 crore payment crisis broke out at National Spot Exchange Ltd (NSEL) in August last year, Sebi further ordered a revamp of its board and governing structure as NSEL was promoted by the same promoter group.
Asked whether he sees any conspiracy in CBI filing a PE years after his retirement, Bhave said, “I have read about it in media reports. I have nothing, no communication from the CBI. I have no idea what is that they suspect, nothing absolutely.
“There is no charge as yet that I know of. It, I believe, is a suspicion. I am going by what is contained in the media reports. I have not been informed or contacted by the CBI.”
Explaining the case, Bhave said that CBI move is based on permission given by him as Sebi Chairman to Jignesh Shah to start a currency exchange when there was a proceeding by the income-tax department against him.
“But CBI chose to ignore that fact the IT department found no merit in its probe against Shah. And yet chose to file a criminal PE against me.
“They are saying there are no raids or arrests yet. Should we wait to get raided and arrested? All that we heard from the media reports that by giving Jignesh Shah the licensee we gave him undue benefit. While this is silly because any licence can result in a benefit, they should find out if MCX-SX has made any profits,” he added.
“It’s a completely crazy logic that CBI has. As regulators, we found that there was a need to create and encourage competition. NSE was the dominant player in the currency derivatives market and BSE was unable to compete with NSE. So by licensing a third party, in this case Shah’s MCX-SX we helped create competition. Is that a crime?” Bhave said.
Rejecting CBI’s assertion that it was prima facie a criminal act on his part, Bhave said, “The argument makes no sense. According to CBI, I have committed a further a criminal act by giving Shah extra time to comply with the regulations. The CBI is looking into this matter after five years of the permission having been given.
“The logic seems to be that the people like Shah against whom there is any enquiry by a Governmental agency should not be given any permission. If such permissions are given, the criminality of the acts of permission-givers will be investigated by the CBI.”
Bhave further said that CBI can “pick and choose” its cases, as it has done in various matters related to Jignesh Shah.
“Just last year, Sebi permitted Shah to continue to run the exchanges under Sebi regulations when there was a show-cause notice issued to him for declaring him not fit and proper by the FMC after it found that Rs 5,000 crore loss was incurred on investors.
“Despite the knowledge of this serious investigation, Sebi under (current chairman) U K Sinha allowed Shah’s exchanges to run. This is all out in the public domain. Does it mean that the CBI should open a preliminary inquiry against Sinha?” he asked.
On whether the CBI move would have a bearing on morale of the regulators, their autonomy and independence, Bhave said, “Such act will definitely have adverse impact on the people.
“It is very easy to say something against someone and make humiliating allegations and malign their reputations. And if they have not found anything criminal act from them, will they apologise? If CBI has not found anything against me, then I want them to publicly apologise to me.
“In this particular case, three Sebi chairmen have arrived at the same conclusion and had similar views. Why don’t they file a PE against the current chairman for continuing the licensee of MCX-SX after the NSEL scam broke out?
“CBI has not bothered to look at the facts. They have not bothered to see that NSEL has caused loss to investors. They also have not bothered to look at the fact that the IT department probe against Shah has not found anything and that they had closed the case against him long ago.
“But they found it worthwhile to file a PE against me based on these closed probe,” he said.
Sebi was incidentally informed about the I-T probe when Bhave’s predecessor M Damodaran served as its Chairman.
Clarifying that he was not demanding probe against former or current chairmen of Sebi as well, Bhave said he was only “explaining the crazy logic behind the case” against him.
Questioning CBI move further, Bhave said, “It is easy to say anything against anyone and not prove it. My only submission is that if they have evidence against me, they should proceed to probe me and share those evidence with me.”
“If they find no substance, then they should apologize for tarnishing my reputation. His (CBI Director’s) statement that no raid or search has been conducted means what? we should wait for to be raided and searched? And till that happens keep us in the dark? The CBI director must look into all the evidence and take such serous decisions,” he added.
When asked whether he would like to reveal something more on the case, he said, “Let me wait for some more days”.
On any possible legal action he may be contemplating, Bhave said, “”I cannot do that as I have nothing in paper with me.” (PTI)
Follow our WhatsApp channel