PRESSURE POINT: JPC Chairman Tripathi

The idea of time in itself is nebulous. More so, when it is a government-appointed body probing a scandal. Take the Joint Parliamentary Committee (JPC) that is enquiring into the causes of the stock-market crash early last year as well as the Ketan Parekh scam that pushed the Unit Trust of India (UTI) into bankruptcy and the NDA Government to the brink. After over a year of being set up, the panel is still to present the final report to the Government.

So far, the 30-member JPC has held 58 meetings spread over 198 hours, examined 26 witnesses and asked institutions as well as individuals 1,516 questions. But the answers defining the reasons for the crash are at least another three months away.

The Nation

THE HOUNDS Focusing on specific leads in the stock market scandal, five members are spearheading the JPC charge MANI SHANKAR AIYAR (Congress) FOCUS: Role of Overseas Corporate Bodies, misuse of the Mauritius route by FIIs and the failure of the SEBI and the RBI. S.S. AHLUWALIA (BJP) FOCUS: The role of the bear cartel and Shankar Sharma in the tanking of the market following the 2001 Budget. KAPIL SIBAL (Congress) FOCUS: Involvement of politicians in helping corporates and bulls plunder the UTI. Plus the targeting of First Global Chief Shankar Sharma. NILOTPAL BASU (CPM) FOCUS: The silence of MoF as the market was rigged, mismanagement of the UTI, the CSE crash, misuse of the Mauritius route by FIIs. KIRIT SOMAIYA (BJP) FOCUS: Funding of Tehelka, role of Sharma in the bear cartel, rot in the UTI and the corporate-broker-banker nexus.

In the meantime, another high-profile financial company, Home Trade, has successfully managed to swindle nearly 20 cooperative banks in Gujarat and Maharashtra. Last month, farmers and low-income depositors lost over Rs 400 crore. Even if the JPC had submitted its findings, it probably couldn't have prevented the scam. The findings, after all, require time for implementation. Indeed, the first item on the JPC's agenda when it met in May 2001 was to examine the non-implementation of the second action-taken report (ATR) of the parliamentary panel that was established in 1992.

However, JPC Chairman Prakash Mani Tripathi is at pains to point out that "it isn't as if remedial action has been stalled. This panel has worked as a catalyst and several measures like barring of the overseas corporate bodies (OCBs), restructuring of UTI, acceptance of the 1998 Deepak Parekh Committee Report and appointment of a super-regulator are being implemented."

Committee member and CPI(M) MP Nilotpal Basu ascribes the delay to the vast ground that was to be covered. "To start with, unlike the earlier JPC, there is no investigation report to go by," explains Basu. "Even the Securities and Exchange Board of India (SEBI) probe is yet to be completed. There are also new players influencing market behaviour." Besides, the JPC is "taking an overall view. The peaking and crashing of markets themselves don't constitute a scam. It was the infusion or withdrawal of money accessed legitimately or illegitimately that affected the common man", he adds.

The Nation

THE ACCUSED SHANKAR SHARMA Allegedly short-sold the market, funded Tehelka. Charged under FERA. Banned from market by SEBI. P. SUBRAMANYAM Former chief of the UTI. Arrested by the CBI for investing in dud tech company Cyberspace. KETAN PAREKH Defrauded the Bank of India and the Madhavpura Cooperative Bank. Arrested by the CBI, out on bail.

To be fair, the panel's task is complex because as Tripathi says, "The scam is far more extensive given the wider web" as compared to the Harshad Mehta stock scandal. It includes cooperative banks, corporates, foreign institutional investors (FIIs) and OCBs, besides banks and the UTI. In fact, the JPC has had to undertake eight sessions of technical briefing by experts from the SEBI, the Reserve Bank of India (RBI), the Enforcement Directorate (ED) and the Ministry of Finance (MoF).

This consumed time, after which the members, spanning 18 political parties, had to be relieved for assembly polls and parliamentary duties. But even on the days they did meet, attendance or participation was less than exemplary. Though some like Congress' S. Jaipal Reddy have had to juggle multiple roles, insiders reveal that nearly half the members have missed over 20 meetings revealing the apathy afflicting the committee. Besides, as one of the JPC members says, "This panel can't match the quality of the earlier JPC, which included seven of the ministers in the current Union Cabinet."

How this will affect the final report is yet to be seen. Unlike other committees, members of the JPC-even the normally loquacious Mani Shankar Aiyar of the Congress-have maintained a studied silence on the findings. However, the committee does seem to have wrapped up the macro picture. Consider some of the observations that will find their way into the final report:

# The boom of 1999-2000 fuelled by banks and corporates was illusory.

# The MoF did not react to the mismatch between the boom and the real economy.

# The SEBI and RBI failed to break the broker-corporate-bank nexus.

# The FIIs and OCBs registered in Mauritius were involved in the scam.

# The UTI had no investment policy and was used to benchmark prices and dump stock.

# The MoF failed to check the misuse and deterioration of the UTI.

# Corporates like HFCL and Zee funded brokers to ramp their shares.

# The crisis at the Calcutta Stock Exchange caused the crash. As corporates withdrew badla funds, the bear cartel tanked the market. Tehelka's sting operation added momentum to the fall.

Though well-documented, none of these facts is exactly a revelation. Secondly, even though scam after scam has been found to be the result of the corporate-broker-banker nexus, the committee has chosen not to call corporates for evidence or questioning. Apparently, when HFCL and Zee were to be called, some members demanded that every listed corporate from Reliance to Infosys be summoned too.

There is hope though. Tripathi points out that the "JPC is an enquiry not an investigation. In the final report-where we will insist on time-bound implementation-the committee will suggest investigations to fix culpability, complicity and dereliction."

Strong words. It's too early to say whether this outlook will be reflected in the final report that Tripathi hopes "should be ready by the end of the monsoon session of Parliament". Before that the JPC has to decide whether Finance Minister Yashwant Sinha is to be called before the committee, particularly with reference to the UTI. One view is that the rot in the UTI was public knowledge and Sinha's plea of ignorance is untenable. Hence, he must be called. The other view is that given the dichotomy between government ownership and need for autonomy, the extent to which Sinha or the Government can be held responsible is a moot point. Indeed, members expect fireworks when the draft report is authored in June.

The stated position of the Left, the Congress and other Opposition members is that the Government is answerable on several counts: for the non-implementation of the earlier JPC's ATR for over five years, for the rampant misuse of the Mauritius route by FIIs and OCBs and for its pusillanimous posture when the markets rose. As Basu says, "The Government responded to the crash with alacrity and ordered a probe, but the same was missing when the market was rising."

Nationalist Congress Party MP Praful Patel hopes the JPC "will focus on what went wrong and not launch a witch-hunt against individuals and institutions". Noble sentiment, but given that the JPC was born of a political agitation, the brewing storm cannot be wished away. Hopefully, amidst scoring political points the members will remember the investors who lost money. And find time for them.