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21 August 2024 at 3:50:16 pm

Power Shield

When a 99 percent shareholder is not been made an accused in a controversial land deal but a one percent shareholder has been named as one, an investigation has some explaining to do. The Bombay High Court has now demanded that very explanation in the Mundhwa land case involving NCP MP Parth Pawar, son of the late Ajit Pawar, raising the eternal question whether political influence quietly alters the way in which the law of the land is applied. A democracy cannot have one standard of scrutiny...

Power Shield

When a 99 percent shareholder is not been made an accused in a controversial land deal but a one percent shareholder has been named as one, an investigation has some explaining to do. The Bombay High Court has now demanded that very explanation in the Mundhwa land case involving NCP MP Parth Pawar, son of the late Ajit Pawar, raising the eternal question whether political influence quietly alters the way in which the law of the land is applied. A democracy cannot have one standard of scrutiny for the politically connected and another for everyone else. Pawar, a Rajya Sabha MP, holds 99 percent of Amadea Enterprises LLP, the company that acquired the disputed land. The remaining 1 percent is held by Digvijay Patil, another partner and director who has been named as an accused. The land in question is a large government-controlled parcel in Pune. The company that acquired it is overwhelmingly owned by Pawar. The land is in Mundhwa, an increasingly valuable area of eastern Pune that has been transformed by the city’s rapid expansion. The parcel covers about 40 acres and has a complicated legal history. It was classified as Mahar Watan land - a historical category of land grant - and was in government possession and leased to the Botanical Survey of India. The FIR in the case alleges that it was transferred to Amadea Enterprises without the mandatory approval of the state government at knockoff prices far beyond market value. The transaction has subsequently faced scrutiny on several fronts. Authorities imposed about Rs. 21 crore in stamp duty and penalties on Amadea Enterprises; the company’s appeal against that order was rejected. A Pune civil court also ordered the sale deed cancelled, declaring it void from the beginning. So, what evidence led investigators to make such a stark distinction between the two shareholders? What was the precise basis on which investigators concluded that Pawar’s overwhelming stake in the company did not warrant the same scrutiny? The High Court had already raised the issue in September after a submission before it alleged that Pawar had not been named because he was “very highly influential.” The state is expected to protect public land, enforce its own rules and investigate alleged wrongdoing without fear or favour. Yet when the transaction involves the son of a senior political figure, the machinery of the state must now explain why its investigation appears to have stopped short of the person with the overwhelming economic interest in the company. Power is supposed to make public officials more accountable, not less. Political office is not a private shield and family connections are not a legal exemption. The ultimate scandal in the Mundhwa case would be the possibility that proximity to power can determine who gets investigated, who gets protected and who gets left carrying the blame.

Lateral upgrade to ailing annihilation

Writer: Mangesh Kulkarni
Mangesh Kulkarni
Sep 9, 2024
3 min read

Updated: Oct 21, 2024

Lateral upgrade to ailing annihilation

Being the first person from the private sector to be appointed as chairperson of Securities and Exchange Board of India (SEBI) as part of the government’s lateral initiative, Madhabi Puri Buch also holds the honour of being the first woman to hold the top post as capital market regulator.

But the laurels that the former private sector banker enjoyed in her earlier stint with ICICI Bank, was marred with allegations that she and her husband were having a stake in offshore entities, which were used to artificially inflate shares of Adani group companies.

Terming the allegation as `character assassination, Buch clarified that all disclosures have already been furnished and the fund in question did not invest in any securities involving the Adani group.

When it rains, it pours. This allegation was subsequently followed by Congress Party allegation that Buch had received salary and post-retirement benefits from ICICI Bank after she quit the private sector bank.

In its clarification to the stock exchanges, ICICI Bank asserted that the payments made to Buch were purely retirement benefits after her exit from the bank and they were neither salary nor employee stock options.

Prior to these allegations, Buch tenure at SEBI was all about bringing in quick reforms on operational issues by changing the format of consultation paper to bring in larger responses digitally. Being data savvy, the rationale of her decisions were democratic based on big data analysis derived from the responses received to the consultation papers.

Further she bifurcated the duties of the SEBI staff between operations and enforcement, which were done by the same persons earlier. Having worked for the private sector in the capital market domain space, Buch had a better understanding of the subject compared to officers from the administrative service in the past that reflected even in her orders as a whole-time director at SEBI before becoming the chairperson. As a whole time director at SEBI, her orders on adjudication issues were more directional to the capital market space, according to experts in the compliance space. She was also quick to revamp the old provisions of the 90s at SEBI.

Being tech and data savvy, Buch enhanced regulatory surveillance and detection of market manipulation, insider trading and fraud while also emphasizing on strengthening corporate governance by introducing stricter rules for independent directors and enhancing disclosures for related-party transactions.

To put in perspective, the annual report of the capital market regulator in the just concluded financial year revealed that the number of investigations related to insider trading jumped to 175 in 2023-24 from 85 in the preceding year while probes related to front running jumped over three times to 83 from 24 in the preceding year.

Transparency in mutual funds by implementing measures to protect retail investors along with tightening norms for initial public offers, particularly in the SME platforms were some of her other positive initiatives including confirmation of denial of any market rumours within 24 hours for the top 100 listed companies which will be extended to top 250 companies from December 1. However increased transparency and compliance with tightening regulations led to increased operational costs for the market participants and hence faced resistance from certain quarters. Born in 1966, Buch completed her primary education in Mumbai and graduated with specialization in Mathematics from Delhi and later obtained a management degree from Indian Institute of Management, Ahmedabad. In between, she got engaged to Dhawal Buch, a director at a consumer goods multinational at the age of eighteen and got married at the age of 21.

Besides ICICI Bank, Buch also worked as a lecturer at a college in England, worked at Greater Pacific Capital in Singapore and ICICI Securities as its CEO. She also worked as executive director on several private sector companies and as a consultant for New Development Bank (Brics Bank).

What now remains to be seen, is whether Buch, who survived the 26/11 terror attack when she along with her husband, was attending a meeting at Taj, be able to overcome the current ordeal. Keeping fingers crossed for the times to come.

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