Ramesh Abhishek, the former controversial chairman of the Forward Markets Commission (FMC), who is currently striving hard either to get appointed as the Union Home Secretary or one of the top officials in the Election Commission, may say he has ‘apple cheeks’ but that has more to do with the recent Supreme Court (SC) verdict that scrapped a forced merger between the National Spot Exchange Limited (NSEL) and 63 Moons Technologies.
The SC judgment, delivered by a division bench of Rohinton Nariman and Vineet Saran, is a tight slap for Abhishek as it ridicules his ill-thought-out recommendation to the government to order a merger of NSEL with 63 Moons Technologies in ‘public interest’.
An investigation by Serious Fraud Investigation Office (SFIO) makes it clear that Abhishek made this announcement post a ‘closed-door meeting with defaulters’ and an open meeting with all stakeholders, members and the exchange.
The SC verdict has pointed out in no uncertain terms that FMC’s suggestion of a merger between the two companies had nothing to do with the public interest. Instead, the apex court said the only reason that remained for a merger was contained in the FMC recommendation, which the court concluded was for the “protection of private interest of a group of investors/ traders, distinct from public interest.”
Whose interest was Ramesh Abhishek protecting?
A simple analysis of the NSEL crisis will show that Abhishek as FMC chairman was dealing in an autocratic manner. He attacked a particular corporate group with full might and vengeance but did not take any action against the misdeeds of brokers, the key conspirators in NSEL fiasco. Not fit and proper, criminal prosecution, merger of 63 Moons and NSEL were among the actions directed towards a corporate group but a 2015 report by the Economic Offences Wing (EOW), Crime Branch, Mumbai Police that made very serious observations on NSEL brokers and their dubious dealings were deliberately ignored by Abhishek.
Curiously, the forensic audit report based on which Abhishek directed his actions towards the corporate group, itself lacked substance as the auditor Grant Thornton made remarks that their audit was incomplete and full of assumptions. SC in its verdict in scrapping the NSEL – 63 Moons merger has observed that the “The so-called (Grant Thornton) report itself stated that there is no independent verification of information provided, and consequently, would not constitute an audit, let alone a forensic audit. It also stated that should additional information become available, which impacts upon conclusions reached in the report, Grant Thornton reserved the right to amend their findings, which are not intended to be interpreted to be either legal advice or opinion; in short, that the findings themselves were inconclusive.”
Yet, the ‘Dabangg’ FMC chairman Abhishek decided to act upon the Grant Thornton report but a police report which was more direct and concrete was brushed under the carpet by Abhishek, who now is hiding behind the veil of immunity that is accorded to Indian Administrative Service officials. Is there no accountability for Babus in India? Despite their deliberate acts of omission and commission will they still keep getting prime postings and extensions when they near retirement age? (As Abhishek’s retirement nears in June, his hunt for a public posting has got desperate so that he remains in the well-oiled circuit of Babus).
SEBI issues notices
Five years after the NSEL fiasco, it is just this year when the suppressed police report of Rajvardhan Sinha, the then Additional Commissioner of Police and chief of EOW, was highlighted by media, that the Securities Exchange Board of India (SEBI) issued notices to brokers. Fact that SEBI found it fit to put brokers in the dock on the same police report ignored by Abhishek in 2015 speaks volumes of the Bihar cadre IAS officials’ intentions in ignoring the crimes of brokers.
The police investigations had found that to generate volumes, large brokers allegedly indulged in financing deals, traded without client permission, illegally changed unique client codes, engaged in market capturing activity, traded under the names of employees, had nexus with defaulters, re-routed funds through multiple accounts, enrolled and financed low income people as clients, misled submission to the EOW about clearing and forwarding services, gave false assurances to investors and were involved in short-sold selling. The report further says that for brokers, higher volumes meant higher commissions and interest on financing deals, which were cut through their own NBFCs. Also, several client claims could not be established and were found to be bogus.
It was known well after the NSEL fiasco that a large number of NSEL clients were fictitious. Even now only a few hundred have come forward to claim their money while the rest of 13,000 simply don’t exist. Can it be concluded now that Abhishek’s ignorance of all these serious questions was deliberate?
Did FMC deliberately misplace minutes of a crucial meeting held immediately after NSEL crises?
On August 4, 2013, Abhishek held a meeting with defaulters and brokers at Trident Hotel, BKC, Mumbai. At the meeting venue, Abhishek announced to the public and media, “there are 23 such entities who owe Rs.5400 crores to NSEL and through the exchange to people who had put money there. Sixteen entities came today and we had detailed discussions with them about how they are going to repay the money, schedule, etc. We found most were willing to repay in as little time as possible for them.”
An investigation by Serious Fraud Investigation Office (SFIO) makes it clear that Abhishek made this announcement post a ‘closed-door meeting with defaulters’ and an open meeting with all stakeholders, members and the exchange. SFIO has attached Abhishek’s statements as an annexure to its report. On August 6, 2013, the Ministry of Corporate Affairs issued a gazette notification conferring ‘omnibus powers’ to the FMC for recovery of money and action against NSEL, defaulters, brokers, and warehouses among others. What happened after Abhishek got these ‘Omnibus Powers’ is now a chapter in history of India’s financial markets. The SC ruling scrapping the merger has just set some of the records straight.
Questions from PGurus to Abhishek
Will Ramesh Abhishek answer the 15 questions that PGurus posed to him? Since Ramesh Abhishek is so convinced and committed to “pursuing the truth”, he should. Will he? Only time will tell.
 SC halts NSEL-FT merger over lack of ‘public interest’ – Apr 30, 2019, The Hindu Business Line
 NSEL scam: 2015 police report gives SEBI fresh ammo against brokers – Jan 6, 2019, The Hindu Business Line
- Why did Rajat Sharma of India TV not declare that Adani owns more than 16% shares in his channel? - January 29, 2023
- Prannoy Roy to get Rs.605 crore from Adani as per Stock Exchange filing. Why is Income Tax not acting on Roys’ dues of over Rs.800 crore? - January 4, 2023
- Is MCX misleading the public about its New platform? Part 2 - December 4, 2022