The preliminary enquiry against ex-Sebi chief CB Bhave and former member KM Abraham is understood to have raised eyebrows in the finance ministry as an income tax case on the Jignesh Shah led Financial Technologies India Ltd (FTIL) was closed over three years ago.
“The issue has been closed for nearly three years. What then, is the basis of the probe by the Central Bureau of Investigation?” said sources close to the development.
The CBI had on March 14 registered a preliminary enquiry against Bhave and Abraham for alleged irregularities in giving recognition to MCX Stock Exchange (MCX-SX) in 2008 and renewing it again in 2009 and 2010. It had also registered a preliminary enquiry against Shah’s FTIL and its commodity arm MCX-SX.
But sources pointed out that though Income Tax authorities, who had started probing FTIL in 2007 had finally closed the case in 2009.
The issue is also likely to be taken up in the next meeting of the Financial Stability and Development Council that is chaired by the finance minister. But the enquiry had only noted that the finance ministry had cautioned Sebi to check the credentials of the promoters as they had earlier faced income tax raids. While Bhave served as Sebi chairman from 2008 to 2011, Abraham’s tenure as a whole-time member of Sebi also ended in 2011.
Since then, the Jignesh Shah-promoted National Spot Exchange Ltd (NSEL) has been in the eye of a controversy and is facing probes since it defaulted on payments of over Rs 5,600 crore to investors.
Significantly, almost co-inciding with the enquiry, former home secretary GK Pillai also resigned from the post of chairman of MCX-SX less than five months after he was appointed.