A squawking parrot

CBI errs in publicising preliminary inquiries

The Central Bureau of Investigation, or CBI, has made a great fuss out of launching a preliminary inquiry into the 2008 decision by the Securities and Exchange Board of India, or Sebi, to allow the Multi Commodity Exchange of India, or MCX, and its parent company, Financial Technologies (India) Ltd, or FTIL, to start currency derivatives trading. The CBI argues that Sebi went ahead and granted permission even though it had been informed by the finance ministry that income tax raids on FTIL had been carried out in June 2007. The fact of these raids, the CBI claims, means that MCX and FTIL were not "fit and proper" recipients of sanction from Sebi. The CBI's director, Ranjit Sinha, has said that the agency thus possesses "credible information" for an inquiry into Sebi and specifically its then chairman, C B Bhave, and another member, K M Abraham.

It is always possible that Mr Sinha is right, and some information may emerge in the course of a formal inquiry that suggests laws were broken. But the actions of Mr Bhave as chairman suggest he was not batting for MCX - quite the opposite. Mr Abraham, too - who famously led the regulatory pushback against the Sahara group - seems to be an unlikely target for major investigations. True, existing reputations should not come in the way of policemen doing their jobs. However, there is more than enough to suggest that the CBI is being irresponsible in how it is going about its investigation of MCX's links in the regulatory set-up. A preliminary inquiry is just that - an opening of an investigation. To name individual decision makers at this stage, in the absence of any real information, seems like little more than an attempt to grab headlines at the expense of individuals' reputations. In November last year, the prime minister had suggested that the CBI should "exercise caution" and "rigorous scrutiny" when judging policy decisions, and "some decisions which appear sensible ex-ante may ex-post turn out to be faulty". Unfortunately, that advice does not seem to have been heeded. As Mr Bhave has pointed out to The Economic Times, naming him and Mr Abraham defies all logic; decisions in favour of MCX were taken before and after his tenure as well, and Mr Abraham was just one of the members of Sebi. And the income tax raid on FTIL was just that - a raid, not a chargesheet, and a case that was closed long ago.

The CBI has grievously erred in publicly airing its half-formed inquiries. Nor is it the first time it has made errors of this kind. Besides the wanton destruction of reputations caused by this irresponsibility on the part of the CBI and its director, there is another problematic facet. The CBI's recent errors come even as it has been emancipated, partly, by the Supreme Court - which had called it a "caged parrot" - from government oversight. And it comes as pressure to ensure its institutional independence increases. By using whatever freedom it possesses so poorly, it is unfortunately strengthening the hands of those who would like to see it forever subservient to the political executive. A happy mean of independence and accountability must be found.