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Journalism of Courage
As always, the lawyer community has scented a major business opportunity in finding flaws and picking holes in the Securities and Exchange Board of India8217;s Sebi order in the 8216;demat scam8217;. Sometimes, the pithy sound bites aimed at reassuring those indicted by Sebi are rather amusing. One lawyer told a TV channel that a Depository Participant DP had followed Know Your Customer KYC norms because the depository accounts that Sebi had dubbed as fictitious had a real person behind them. He suggested that it was irrelevant that the person happened to be a 8216;slum dweller8217; who couldn8217;t possibly be the real investor. Trust a lawyer to reduce KYC norms to a simple filling of forms in order to build a technical defence instead of encouraging them to approach the regulator and offer to clean up their operations and made amends. In the barrage of criticism that its order has attracted, one lawyer has defended the 8216;tentative8217; but 8216;interim8217; nature of its order and he happens to be the Finance Minister.
Lacking horse sense
Ownership trail
This column had reported how a group of investors obtained a stay order from the Company Law Board CLB against the attempt by Nalwa Sons Investments holding company of the Jindal Group to allot shares worth over Rs 30 crore to 19 recently-recruited employees under a hastily hatched Employee Stock Purchase Plan ESPS. We now learn that some curious activity had preceded the Jindal bid to enhance their voting power in the holding company it is unclear why business houses list their holding companies and collect public money if they are reluctant to share benefits with minority shareholders. On October 10, 2005, a Sebi official wrote to Ricky Ishwar Dass alleging that he along with Persons Acting in Concert PAC had crossed the 15 threshold under takeover regulations that trigger off the need to make an open offer. The investor, along with his PAC, holds a 13 stake in Nalwa and has dragged it to the CLB. Sebi claimed that five other investors were also part of his group and had not reported their links as PAC with Ricky Ishwar Dass. The list included Copthall Mauritius, a FII sub-account that Sebi should remember. The investor not only denied the charge but in an unusual move has hit back at Sebi asking why these holdings do not figure in the quarterly reporting of shareholding pattern to exchanges. Where then did Sebi get these names and on what basis did it link them to one NRI investor? Ricky Ishwar Dass asks Sebi to 8216;8216;shed some light in this regard8217;8217;, but there is more to it than meets the eye.
Curious allottees
Meanwhile, Ricky Ishwar Dass has done his own sleuthing about the 19 new employees of Nalwa Sons who were to be get a Rs 30 crore bonanza guised at ESPS at just Rs 0.77 crore. In a letter to the regulator, he alleges that these employees are in fact 8216;Persons Acting in Concert8217; with the promoters. Providing specific names, designations and documents he proves that as many as five employees are directors of other Jindal group companies. With the scheme already stayed by the CLB, it is clear that the Jindals will soon find another way to enhance their voting capital while keeping minority shareholders out of the loop in their effort to formalise the separation of shareholding and control of group companies between the brothers. The battle is bound to turn more interesting. suchetadalalyahoo.com
