Amid Hindenburg probe calls, look at JPCs on financial allegations

Joint committees are set up by a motion passed in one House and agreed to by the other. The details of membership and subjects relating to a particular JPC are decided by Parliament.

A JPC can look into documents and examine officials of any ministry or institution concerned. If one or more members disagree with the majority in a JPC, they can submit notes of dissent.

It is up to the government to take action on the recommendations of the committee. If it so wishes, the government may launch investigations on the basis of a JPC report. But it must, in any case, report on the follow-up action taken on the committee’s recommendations.

Based on the government’s reply, the committee submits an ‘Action Taken Report’ in Parliament. The Action Taken Report can be discussed in Parliament, and the Opposition can ask questions of the government.

For the opposition, a JPC matters because it can then get access to all details around an alleged scam, and can also ensure that the issue stays in news. This can bring significant political pressure on the government — a reason why all governments resist demands for an investigative JPC.

Financial investigations

So far, only three JPCs have been constituted to investigate alleged financial crimes — on the 2G spectrum scam in 2013, on the Ketan Parekh share market scam in 2001, and on the securities and banking deals relating to Harshad Mehta in 1992.

The JPC investigation into the Bofors scam was significant, too. A JPC formed in 2013 to investigate the VVIP AgustaWestland chopper scam and the role of alleged middlemen in the transaction did not take off after the BJP refused to participate.

2G SPECTRUM (2013): The JPC report absolved Prime Minister Manmohan Singh of wrongdoing, saying he was misled about the procedure to be followed by the Department of Telecommunications on issuance of Unified Access Services licenses.

It said that the assurance on maintaining full transparency in following established rules and procedures of the Department, given by Minister of Communications and Information Technology A Raja in all his correspondence with the Prime Minister, had been belied.

The BJP and several other opposition parties rejected the report, calling it an attempt to cover up the scam. The BJP described it as the most shameful scam in India’s history.

The JPC disagreed with the conclusion on revenue loss reached by the Comptroller and Auditor General of India (CAG), saying the “very move for calculation of any loss on account of allocation of licence and spectrum is ill-conceived”.

It concluded that the consistent stand taken by the Telecom Regulatory Authority of India for non-revision of licence fee and not favouring auction of spectrum was in conformity with the policy prescriptions of New Telecom Policy 99 and the 10th Five-year Plan document that treated telecom as an infrastructure sector for the decade commencing 2002.

SHARE MARKET SCAM (2001): Heavy exposure to the stock markets led to a run on the deposits of Ahmedabad-based Madhavpura Mercantile Cooperative Bank (MMCB). The exposure was due to Ketan Parekh, a stock broker who was also a director of MMCB. It was alleged that at his behest, the bank issued pay orders without the backing of funds. Parekh was accused of using this money to rig share prices of 10 Indian companies between 1995 and 2001.

The scandal was revealed after MCCB failed to honour the pay orders it had issued. A JPC was formed in 2001, when Atal Bihari Vajpayee was Prime Minister, and it submitted its report after 105 sittings in December 2002.

The report recommended sweeping changes in stock market regulations. However, its recommendations were not fully implemented. Parekh was convicted for a year in 2008 and for two years in March 2014.

SECURITIES & BANKING TRANSACTIONS (1992): Allegations that “Big Bull” Harshad Mehta, who had become a household name, had diverted funds from the public sector Maruti Udyog Limited to his own accounts, leading to a 570-point fall in the Sensex, set off a major political storm, and led to the formation of this JPC during the tenure of Prime Minister P V Narasimha Rao.

The CBI filed 72 sets of charges relating to criminal offences, and in October 1997, a special court set up to examine the securities scandal-related cases approved prosecution on 34 charges brought by the agency. There were also about 600 civil cases related to the matter.

There were four convictions, and Mehta himself was sentenced in September 1999 on charges of fraud relating to Maruti Udyog Limited. However, the JPC’s recommendations were not fully implemented.