CB Bhave: PE in MCX-SX could be a diversion away from real culprits in NSEL case

Mar 31 2014, 12:52 IST
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The CBI has  initiated a preliminary inquiry against former SEBI chairman C. B. Bhave and former member K M Abraham. The CBI has initiated a preliminary inquiry against former SEBI chairman C. B. Bhave and former member K M Abraham.
SummaryFormer Sebi chief CB Bhave says public spectacle could have avoided if CBI had first got in touch with him.

case. What could be the connection?

It is quite incomprehensible. NSEL was given the permission for one day ready forward by the government in 2007. The fraud in NSEL occurred in 2013. We, in Sebi permitted MCX-SX to trade in currency derivatives in September, 2008. How is Sebis permission of 2008 to MCX-SX connected with the problems in NSEL in 2013? Moreover, in June, 2008 CERC permitted another group company of the same group to start a power exchange. The same MCX-SX was permitted by Sebi to trade in equities in 2012, long after both Abraham and I had left. The CBI finds no connection between these other permissions and the NSEL crisis. It seems to discover a connection only with the permission Sebi gave in 2008.

How do you in retrospect evaluate the role played by KM Abraham in the grant of licence and subsequent renewals, especially was he right in his interpretation of the MIMPS (increasing public shareholding in stock exchanges) guidelines?

I have no access to the original papers and it is not easy to remember the notings that are almost six years old. But the quality of Abrahams advice is irrelevant. The relevant fact is that I approved the grant of licence to MCX-SX for currency derivatives trading. If anything, I need to be questioned. Even if you assume that Abrahams interpretation was not right, it is not criminal to go wrong in your interpretation. Many times higher courts do not agree with the interpretation of the lower courts.

Did Sebi take into consideration that though not in securities market domain, NSEL did exist and was possibly dodgy?

As far as I can remember NSEL had not started its regular activities when Sebi considered MCX-SXs case for currency trading. There was no way of saying that NSEL was dodgy at that time. This question may be relevant when Sebi permitted MCX-SX to trade in equities. But that was in 2012 and I had left by then.

Is there a possibility that there is a political angle to the spate of allegations made by CBI?

I have no way of assessing that. I certainly know that we could have avoided this public spectacle if CBI had first got in touch with me, and asked me what I would say to their various doubts in the case. They could then have seen the papers and made up their own mind. Instead

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