Former SEBI member writes to PMO on Board 'protecting' Bhave

In a letter to the Prime Minister, the then member SEBI G Mohan Gopal wrote, "As an outgoing (part time, independent) member of the SEBI Board, I write to convey my strong concern about the gross abuse of power and corrupt practices in the SEBI Board over last two years to protect SEBI Chairman C B Bhave from being subjected to independent inquiry with respect to his actions as Chairman of NSDL during IPO Scam".

The letter written on December 24, 2010 has been made public by the Prime Minister's Office in an RTI reply to activist S C Agrawal.

The PMO has said it has forwarded the letter to the Finance Ministry for further action.
When contacted, Bhave decline to give his comments.

The Finance Ministry also said, in its RTI reply dated April 8, 2011, that it has forwarded the letter to the SEBI for its comments and even sent three reminder letters but no reply has come.

The finance ministry had set up a committee consisting of two SEBI members--G Mohan Gopal, now the National Judicial Academy director, and V Leeladhar-- to look into the IPO scam.

The committee had passed three orders and found that NSDL had failed in its duty.
It had also passed remarks against the manner in which SEBI had functioned during the scam days.

Mohan Gopal, in his letter to the Prime Minister, has alleged that his "objections to illegal and unethical actions" did not elicit any response in the board and he was "isolated and threatened" for the same.

"I brought issues to the attention of the Finance Secretary at an early stage, to no avail mainly because the representatives of the Ministry of Finance on SEBI Board (no longer with the Ministry of Finance) was an active part of developing and implementing the impugned actions," he wrote.

NSDL was given clean chit last year by SEBI when C B Bhave was its chairman.
Bhave had recused himself from the SEBI board meeting in February 2010, when NSDL matter was discussed, as he had previously headed the depository.

The Supreme Court had asked SEBI to reply whether it would revisit its decision to give a clean chit to NSDL (National Securities Depository) in the 2006 IPO scam.

The apex court had expressed concern over SEBI's outright rejection of the report, and had asked the market regulator to give its stand.

It had remarked that as the committee comprised senior SEBI officials, the report should have been considered by the regulator.

The apex court was also not convinced by the submissions of SEBI that the committee exceeded its limit.

Curiously, the SEBI did a U-turn in the Supreme Court last week when it filed an affidavit agreeing to restore orders indicting Bhave in the IPO Scam.

In an affidavit filed on May 5, the SEBI said it would reconsider the very orders it had declared as non est in November 2009 when Bhave was Chairman.