Outgoing Sebi member KM Abraham said the regulators board should ask the finance ministry to observe Central Vigilance Commission guidelines before starting inquiries against members. Abraham has sent the unusual proposal in his capacity as member to the board of the market regulator to consider at its next meeting scheduled for June 30.
The proposal has wide ramifications on how the nodal ministries should deal with the conduct of members at the regulators.
Explaining the rationale behind the proposal, the member has said unless safeguards are in place, members of regulators are caught in a vice-like grip of fear and inaction.
Without taking names, Abrahams letter to Sebi board details a campaign carried out against him by a corporate entity.
The entity circulated papers about his purchase of an apartment in Mumbai to various agencies including the finance ministry. Abraham also blames the finance ministry in this regard: The decisions in the ministry of finance to examine (such documents), ignoring the guidelines applicable in this regard, have only served to aid this corporate entity in achieving this objective. The letter says even though the regulator had found the allegations baseless and twice reported it as such to the finance ministry, the latter had decided to keep the matter alive and seek further views.
Speaking on the issue, noted economist Bibek Debroy said there should be a template in place to handle such relationships. He said this was not happening and instead of a code of ethics being put in place, the government was working on an ad hoc basis. Last month, Abraham had written to the Prime Ministers Office, linking an inquiry by the tax department on his income to this campaign. The Kerala cadre IAS officer who completes his three-year term with Sebi next month, is in charge of market surveillance and investigation departments.