The agencies looking to scrutinize the affairs at India’s largest stock exchange include the corporate affairs ministry, income tax department and the Securities and Exchange Board of India (Sebi), the officials said, requesting anonymity.
The bizarre events at India’s largest stock exchange surfaced after a Sebi probe found Ramkrishna shared the bourse’s confidential information with an unidentified spiritual guru, apart from hiring a little-known public sector executive, Anand Subramanian, first as an adviser and then promoting him as chief operating officer at the guru’s behest. Ramkrishna also allegedly relied on the guru’s advice on crucial decisions about running the exchange and went on holidays to tax havens such as Seychelles, the probe found.
The moves by the government agencies follow the Central Bureau of Investigation (CBI) on Friday widening the scope of its ongoing probe into the case of preferential access to NSE’s algo-trading platform. CBI included the new facts of leakage of sensitive information from the exchange to an unknown third person as part of the probe.
“Ravi Narain (a former managing director and director on the board) was questioned on Saturday in Delhi by the CBI in connection with the co-location scam," said a person aware of the matter.
This isn’t the first allegation of corporate governance lapses that have played out at NSE. Its plan to go public suffered a setback after allegations emerged that it provided unfair access to some high-frequency traders by allowing them to host co-location servers at the exchange premises to speed up algorithmic trading.
Ramkrishna and Narain could not be immediately reached for comment. Spokespeople for the corporate affairs and finance ministries and Sebi did not respond to requests for comment. A spokesperson for NSE declined to comment. However, in an earlier statement, NSE said it would cooperate with regulatory authorities.
The ministry of corporate affairs is probing if Subramanian’s appointment as COO of NSE and the board’s failure to take corrective action violated the provisions of the Companies Act, the official said.
The Sebi order had said Subramanian’s re-designation as COO violated Companies Act, 2013.
“The re-designation was not tabled to the then NRC (nomination and remuneration committee) despite the fact that as per the provision of the Companies Act, 2013, he would have been a KMP (key managerial personnel), and his re-designation would have needed an approval from NRC," Sebi said in its order.
“The independent directors (called public interest directors or PIDs in case of exchanges) were severely lacking in their duties as they failed to take any action against Ramkrishna when they knew about the lapses in Subramanian’s hiring and were aware that key information pertaining to the exchange was being shared with an unknown third party. These can attract strictures under the Companies Act," the official added.
The Sebi order has gone into considerable detail about how the PIDs were lacking in their conduct. But regulatory action as a direct consequence of these violations has been limited to a ₹2 crore penalty on NSE and a restriction on launching any new products for the next six months.
“There is a separate ongoing proceeding against the directors who allowed Ramkrishna to exit through resignation with glowing praises for her years of work despite knowing that she has committed such a bizarre misconduct," said the second of the three officials.
An EY forensic audit submitted in July 2018 highlighted how confidential details, including those pertaining to NSE’s five-year financial projections, dividend payout ratio, business plans, board meeting agendas and consultations over employee ratings/performance, was shared by Ramkrishna with unknown people.
According to Sebi, there are two grave lapses. One, despite discussing irregularities in Subramanian’s appointment on 21 October 2016, the board did not record it in the minutes, citing confidentiality and sensitivity. Two, even though the email exchanges with the third party were brought to the notice of Ashok Chawla, the then chairman of NSE, and Dinesh Kanabar, chairman of NRC in November 2016, they were shared with NSE board in a closed-door meeting, and in view of the confidential and sensitive nature of information, it was not recorded in the minutes either.
The income tax department is examining the travel details of one board member, one private person, Ramkrishna and Subramanian, said the third official cited earlier. “The income tax department is specifically looking at records, before and after Ramkrishna resigned. The trigger for looking at travel history is the email which refers to travel plan to Seychelles, a so-called tax haven," said the third official.
Sebi’s 190-page order passed on 11 February cited an email sent on 17 February 2015 which made reference to travel plans sent by the unknown third person who communicated from the email address rigyajursama@outlook.com.
“P.s., keep bags ready I am planning a travel to Seychelles next month, will try if you can come with me, before Kanchan goes to London with Kaanchana and Barghava and you to New Zealand with two children. HK is a preferred transit or Singapore for onward journey. In case you need help pl let me know Seshu will do the needful. If you know swimming, then we could enjoy a sea bath in Seychelles and rest in the beach. I am asking my tour operator to connect with Kanchan for all of our tickets," it said.
The Economic Times reported on 19 February that the income tax department is probing a possible fund diversion to three foreign jurisdictions.
The tax department has found frequent visits to Singapore, Mauritius and Seychelles by Ramkrishna.
“The authorities could ask for information from these countries. Ramkrishna has explained the trips to Singapore and Mauritius as work-related since India gets considerable foreign flow from these countries, but many of the trips were personal in nature. Further, from Seychelles, India has low to nil foreign flow but is a known tax haven," said the official.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!
Agencies on trail of Chitra Ramkrishna's tax haven trips - Mint
Read More
No comments:
Post a Comment