Uproar over I-T raids on Sebi members

Officials of the Central Board of DirectTaxes (CBDT) have confirmed that an inquiry was conducted about the Income-Tax (I-T) returns of whole-time members of the Securities and Exchange Board ofIndia (Sebi) but downplayed it by calling it "routine scrutiny".

These raids on C.B. Bhave, therecently retired Sebi chairman, and his team follow a pattern and indicate athreat to the independence of financial sector regulators. This kind of brazenvindictiveness by a ministry concerning serving and retired regulators was rarein the past.

K.M. Abraham, a whole-time Sebi memberwrote to the Prime Minister after the IT department inquiry about flats boughtby him, alleging that he and another whole-time member M.S. Sahoo were harassedin the name of making inquiries.

This complaint against the way the financeministry attempts to throw its weight around comes in the backdrop of T RowePrice, the largest shareholder of UTI Mutual Funds, alleging that the ministrywas backing IAS officer Jitesh Khosla, who is the younger brother of Unionfinance minister Pranab Mukherjee's advisor Omita Paul.

There were reports that the ministry wasnot happy with Sebi as the market regulator led by Bhave was not budging onseveral corporate issues, including the granting of equity licence to MCX-SXand manipulation of shares of the erstwhile Reliance Petrochemicals Ltd (sincemerged with Reliance Industries Ltd).

Mail Today was the first to publish areport in the last week of March on the drastic changes in the higher echelonsof Sebi that were likely to lead to a change of perception of the regulator onseveral critical issues. Between December 2010 and July 2011, there would befour fresh faces on the board of the market regulator. The other criticalissues on which Sebi was not allowed to arrive at a decision before Bhave'sretirement include the Bimal Jalan Committee recommendations on marketinfrastructure institutions (MIIs) and the makeover of the Takeover Code basedon the Achutan committee recommendations.