The Telegraph
Since 1st March, 1999
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SHCIL muzzles whistle-blower

Mumbai, Oct. 8: Sebi’s interim report on the March 2001 market mayhem submitted to the Joint Parliamentary Committee (JPC) says the Stock Holding Corporation India Limited (SHCIL) could have staved off trouble if it had heeded warnings from a key official.

M. Ramesh, SHCIL’s manager (vigilance and security), had submitted a report detailing the irregularities in deals with a cabal of influential Calcutta Stock Exchange brokers. But, the findings were ignored and the management of the depository went after the man they believed had ruffled feathers by dredging up the dirt within.

Former CEO and managing director B. Virupaksha Goud, who faces an inquest by the Calcutta Police over the payment paralysis at Lyons’ Range, could have acted on Ramesh’s report and spared SHCIL the trouble it later found itself in, but he chose to sit on it, Sebi says.

According to the watchdog, JPC members discussed Ramesh’s report on June 26, 2002 while sifting through the tangle of deals between SHCIL and Harsh Chandra Biyani/Biyani Securities Private Limited (BSPL).

“It was mentioned that Ramesh’s report brings out certain irregularities in SHCIL’s working in these transactions. As the report portrays SHCIL in a negative light, Ramesh is being persecuted,” the Sebi report states.

The regulator called for copies of Ramesh’s report after the Joint Parliamentary Committee asked it to investigate the deals and fix accountability on SHCIL officials.

Three reports written by Ramesh on September 18, 2001 throw up many irregularities / issues in the way SHCIL ran its affairs. Since an examination of all issues would take a long time, a Sebi team has looked into issues that are germane to JPC’s investigation effort.

Ramesh, whose report is also being studied separately for implications that go beyond the JPC’s brief, is reported to have found out that BSPL was not an empanelled broker when dubious transactions were made between February 27, 2001 and March 2, 2001.

He said papers for enrolment were submitted with fudged dates — they were filed much after the days recorded — but SHCIL has provided documents to prove that BSPL was ushered in on February 23 last year.

Another issue raised by Ramesh was that BSPL had not paid the empanelment charges. Sebi has evidence that while the enrolment agreement was dated February 23, 2001, the fee was received on March 22, 2001 — almost three weeks after Biyani’s web of deals rocked the Calcutta Stock Exchange.

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