CVC mulls action in Sebi member appointment case

CVC says necessary action may be taken on the issue raised in the petition with reference to the validity of vigilance clearance accorded to Prashant Saran

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The Central Vigilance Commission (CVC) is mulling ways to take 'necessary action' against Sebi's whole-time member Prashant Saran in the matter pertaining to his re-appointment when the member's tenure came up for renewal in 2012.

The move follows a Delhi High Court directive to CVC, market regulator Securities Exchange Board of India (Sebi) and the Finance Ministry in March 23 in the matter. The order states that the authority concerned consider the issue raised in the petition and pass an appropriate order in accordance with the law within eight weeks and communicate the same of the petitioners.

Business Standard has reviewed the copy of the CVC letter dated May 9 where the commission has highlighted the charges made against Saran. In the letter, CVC clearly stated to DEA that "necessary action may be taken on the issue raised in the petition with reference to the validity of vigilance clearance accorded to Saran".

The letter has also mentioned the charges against Saran. It said: "Prashant Saran was appointed as a whole-time member for the second time in August 2012, without having vigilance clearance from the CVO, department of economic affairs (DEA) as per the procedure. The appointment of Saran was made despite an on-going investigation by the Central Bureau of Investigation (CBI) against him on the issue related to Bank of Rajasthan (BoR) and vigilance clearance was issued by CVO, Sebi despite pending complaints against him."

An email sent to the Sebi did not elicit any response.

"In such cases, the government officer could face the consequences at the time of retirement. For instance, the government perhaps not clear the retirements benefits like gratuity, provident funds etc of the individual," said a vigilance officer on the condition of anonymity. The matter will be closed only when the charges against the individual would disposed off, he added.

KEY EVENTS

• Mar 10,2010: Sebi passes an interim order banning about 100 entities, including Bank of Rajasthan promoters, from the market
• Mar ‘12: Sebi member Prashant Saran (pictured) passes interim order lifting the ban on promoter entities, allowing them to sell ICICI Bank shares
• Feb ‘13: Adjudication order passed for minor penalty by a junior officer. Order says disgorgement could not be ordered as the amount of illegal gain not quantifiable
• Jan ‘15: Saran quizzed by CBI in Bank of Rajasthan case
• Oct ‘15: CVC writes to DEA about a complaint received that Saran’s appointment took place without clearance from ministry
• Mar 23,’16: Delhi HC orders to consider the issues highlighted in a petition challenging Saran’s appointment.

As per the procedures for appointment of chairman and members, vigilance clearance is granted by the concerned ministry. In the case of Sebi, the concerned ministry department is DEA.

Saran's terms ending in come June was alleged of weakening a case against promoter of (BoR). CBI has been examining Saran for his alleged role in the purported dilution of penalty from Rs 2,000 crore to Rs 30 crore levied on the promoters of BoR. But the case is yet to be concluded.

It is learnt that a writ petition has been filed in the Delhi HC against the appointment of Saran as Sebi member. The petition has been filed by the society standing for all youth mass awareness (SSAYMA), and contends that for appointment of whole time member, the finance ministry has to seek vigilance clearance from the CVC. Saran, whose tenure was re-appointed in August 2012, did not have CVC clearance, the petition alleged.

"Interestingly, two other candidates who were shortlisted by the search-cum-selection committee for same post were not appointed because they did not receive the mandatory vigilance clearance from CVC," the petition stated.