WHEN media reports emerged last fortnight of a draft report of the Joint Parliamentary Committee inquiring into the financial irregularities that paralysed the country's stock markets in 2001, several members of the JPC itself were more than a trifle surprised. They were working on the understanding that what they had in their possession was little else than a preliminary set of observations put together by the committee secretariat. Most of them had not read the report, far less formulated their responses. And many of them were under the belief that the JPC still had a long way to go before it completed its inquiries. Crucial witnesses remained to be summoned. And the issues of responsibilities and remedies had not been debated within the committee with any depth or rigour.
Certain members were moved quickly to action. The day following the initial media reports, the Lok Sabha Secretariat issued a statement on behalf of the JPC disclaiming the "so-called draft report" which, it said, did not "represent the views" of the committee. Disregarding counsels of moderation, the JPC also warned that it was looking into questions of "breach of privilege" over the misrepresentation of its views.
It was initially unclear who the intended targets of the privilege motion were: the media that had published the supposed findings of the JPC, or the members who had leaked them with the intent to pre-empt the final conclusions. It did not take much deliberation to convince the committee that the former was the only reasonable course. Angry members have now reportedly pressured JPC chairman Prakash Mani Tripathi to identify the source of the leak and initiate appropriate action. Informally, they were willing to say that the notes that had been assembled by the JPC secretariat reflected little else than the Chairman's views.
Among the terms of reference of the JPC is the crisis in the Unit Trust of India, the country's largest mutual fund. The first public manifestation of the crisis was the UTI's decision in July last year, to suspend redemptions of its flagship US-64 (Frontline, August 3, 2001). A few inquiries then established a trail of imprudent transactions, particularly in the so-called "New Economy" shares of infotech, communications and entertainment (ICE) companies. Yet, the draft report has arrived at conclusions that can only be described as vapid. It has, in a desultory fashion, held the then chairman of UTI, along with two other officials of executive director rank, directly responsible. And the culpability of the brokers who contracted the deal has also been pointed out.
The subsequent default on US-64, following unusually heavy redemptions in the preceding three months, is again glossed over. The report does not go beyond the inferences drawn by a former official of the Reserve Bank of India, S.S. Tarapore, who submitted an inquiry report late last year. And it shows an unseemly anxiety about protecting the then Finance Minister, Yashwant Sinha, from any part of the blame.
The hapless former chairman of the UTI has again been squarely held responsible for the redemptions crisis. Evidence before the JPC indicates that he assured the government in May last year that the travails of the US-64 scheme were temporary and would be surmounted once stock exchanges resumed their upward trend. And when he did alert the government to the magnitude of the problem, Ajit Kumar, Secretary, Ministry of Finance, was less than prompt in conveying the information to the Minister.
Certain members of the JPC find this construction an exercise in evasion. It was evident since the stock markets slipped into paralysis following the Union Budget last year that the regulatory agencies and the large public sector institutional investors were deeply implicated in the process and helpless to devise an escape route. Rather than wait to be informed of the magnitude of the problem, a responsible Ministry should have launched its own inquiries and remedies at an early stage. That this was not done is not the only suggestion of political connivance in the scandal that the country's markets are yet to recover from.Sukumar Muralidharan
THE sensational Coomar Narain espionage case, which rattled the Rajiv Gandhi government in 1985, came to a close in a Delhi trial court on July 16 with the conviction of 13 of the 18 accused. Additional Sessions Judge R.K. Gauba held them guilty under Section 120-B of the Indian Penal Code (criminal conspiracy) and under the Official Secrets Act (OSA). Even though charges were framed in March 1986, the trial was held up for almost seven years between July 1992 and April 1999. During the course of the trial, two of the accused - Coomar Narain and A.P. Sarathy died. Hence the proceedings against them were dropped.
The Delhi Police's Special Branch busted a spy racket on January 17, 1985 with the arrest of Coomar Narain, then regional manager in the Delhi office of the Mumbai-based SLM Maneklal Industries Limited, which was engaged among other things, in the supply of marine engines and blowers. The firm collaborated with companies in erstwhile West Germany, Switzerland, Poland, Bulgaria and France. Narain was a former employee of the Department of Economic Affairs in the Finance Ministry and was able to use his contacts in the government to get information pertaining to the business interests of his employer.
The court found that the accused visited Narain's office and supplied him from time to time secret and classified information on economic policy, intelligence reports on internal and external political developments, defence matters and foreign investment, in return for gifts in cash and kind.
Narain entertained the accused using company funds. In addition to the commission from his employer, Narain received about Rs.1,50,000 from certain foreign embassies in India.
The Judge awarded the maximum punishment to the then managing director of SLM Maneklal Industries, Yogesh T. Maneklal - rigorous imprisonment for 14 years. Yogesh Maneklal had mobilised the resources of the Delhi regional office of the company for nefarious activities aimed at winning favours from his foreign collaborators; he cajoled and inspired Narain to set up the network, the Judge found.
All the other accused were sentenced to 10 years' rigorous imprisonment, which included the period of detention they had already undergone in the case. S.L. Maneklal Industries was fined Rs.1 lakh for the offence punishable under Section 5 of the OSA.V. Venkatesan