The CBI had instituted the preliminary enquiry against Mr. Bhave, the then SEBI member K. M. Abraham, Jignesh Shah-led Financial Technologies India Limited (FTIL) and MCX and others.
Even as the former SEBI chairman C.B. Bhave has raised questions over the preliminary enquiry registered by the Central Bureau of Investigation in connection suspected irregularities in the grant of recognition to MCX Stock Exchange during his tenure, the agency plan to seek clarifications from him to ascertain how the approval was given despite objections from the Finance Ministry.
“The preliminary enquiry has been initiated to verify the suspicions of irregularities. We have received some documents revealing that the Finance Ministry had raised objections to the grant of recognition to MCX-SX. However, SEBI gave an approval in 2008 and it was renewed in 2009 and 2010,” said an official.
The CBI had about a week instituted the preliminary enquiry against Mr. Bhave, the then SEBI member K. M. Abraham, Jignesh Shah-led Financial Technologies India Limited (FTIL) and MCX and others. The probe has triggered sharp reactions with senior bureaucrats coming out in support of Mr. Bhave and Mr. Abraham.
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, Mr. Bhave also accused CBI of indulging in “pick and choose” while registering a Preliminary Enquiry (PE) against him and SEBI’s another former senior official in Shah-related matters.
A former Maharashtra cadre IAS officer of 1975 batch, Mr. 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, Mr. 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, Mr. Bhave retorted, “They are saying there are no raids or arrests yet. Should we wait to get raided and arrested?”
Mr. 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 probe against Mr. Shah. Yet, CBI chose to file a criminal PE against me”.
On CBI’s assertion that Mr. Shah was given undue benefits by grant of licence, Mr. 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.
Mr. 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 Mr. 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.