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AS Indiabulls hits back in SC, whistleblower veracity under question (IANS Exclusive)

IANS  |  New Delhi 

The new Whistleblowers Protection Amendment Bill, 2015 passed by the Lok Sabha subsumes the earlier one dated 2014. The Bill provides a mechanism for receiving and inquiring into public interest disclosures against acts of corruption, wilful misuse of power or discretion, or criminal offences by public servants.

The Bill prohibits the reporting of related disclosure if it falls under any 10 categories of information. These categories include information related to: (i) economic, scientific interests and the security of India; (ii) Cabinet proceedings, (iii) intellectual property; (iv) that received in a fiduciary capacity, etc.

The Bill permits disclosures that are prohibited under the (OSA), 1923. The Bill reverses this to disallow disclosures that are covered by the OSA.

Whistleblowers have played an important role in protecting and safeguarding shareholder interest in recent times, be it Ranbaxy or or ICICI, helping clean up the malfeasance in the companies and even nailing the management.

In the ongoing (IHFL) case, the converse stands true for two alleged whistleblowers, Abhay Yadav with four shares and Vikas Shekhar with two shares, attempting to virtually blackmail the company. Is SEBI going to give them protection under the Whistleblowers Bill or is he going to reward them for giving the purported clarion call against alleged

Abhay Yadav, the petitioner and one of the IHFL shareholders, alleged that Sameer Gehlaut, with the help of one Harish Fabiani -- an NRI based in -- allegedly created multiple "shell companies" to which IHFL loaned huge sums of money under "bogus and non-existent pretexts".

In a tit for tat move on Wednesday, IHFL moved the Supreme Court, seeking urgent listing of a plea filed against it in which it has been alleged that the company misappropriated Rs 98,000 crore of public money.

A.M. Singhvi, appearing for the company, mentioned the matter for urgent listing before a vacation bench comprising justices and Singhvi told the bench that frivolous allegations have been levelled against the company in the petition and the plea was leaked to the media.

He said that due to regarding filing of the petition against the company, IHFL has incurred loss of around Rs 7,000 crore of its market share. The bench said it would take a decision during the course of the day about listing of the plea.

In a fresh and bizarre twist on Monday, wrote to the asking for safeguarding his clients -- Abhay Yadav and Vikas Shekhar -- from being muzzled by Indiabulls Housing staff and This game of hide and seek between the complainants and the corporate, which is now in the SC, needs to be resolved post haste for every trading day, punters are battering the stock.

On Wednesday, it was mauled again, down 7.88 per cent or Rs 53.15 to close at 621.40 as shareholder wealth eroded further. One way or the other, both the SC and the (Sebi) need to clear the air on the status of the whistleblowers and their exact plea and action on the same. Protecting the truth has primacy over everything else.

Furthermore, Sebi has now rigged up a plan to reward whistleblowers. Sebi said it would reward the informant with 10 per cent of the monies collected through disgorgement orders, but it would not exceed Rs 1 crore.

"An interim reward not exceeding Rs 10 lakh may be given at the stage of issuance of the final order by the Sebi against the person directed to disgorge. The final reward, after adjusting the interim reward, shall be issued after collection or recovery of the monies disgorged equal at least twice the final reward," Sebi said. The reward would be paid from the (IPEF).

In a bid to protect the interests of investors and curb insider trading cases, regulator Sebi has proposed an informant mechanism wherein genuine whistleblowers will be rewarded for exposing fraud and wrongdoing in a company. Proposing a mechanism that provides "near absolute confidentiality along with appropriate safeguards," Sebi said it would help strengthen the mechanism for early detection of insider trading cases.

Insider trading refers to trading of securities while in possession of Unpublished Price Sensitive Information (UPSI) about the particular securities. The regulator said it faces several challenges while investigating insider trading cases as direct evidence is not easily available.

"It is desirable that Sebi considers instituting a process that enables timely reporting of instances of insider trading violations and also provide for grant of reward with adequate checks and balances that could incentivise timely reporting of information," according to a consultation paper by Sebi.

The regulator said it will provide adequate safeguards against victimisation of the informant.

-- IANS

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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Wed, June 12 2019. 21:28 IST
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