Team Anna versus Pranab: Rattling the wrong skeletons

Team Anna wants Pranab Mukherjee, widely considered a shoo-in for the job of president, investigated for three controversial events that happened during his watch as external affairs minister and defence minister: a rice export deal dating to 2007, the Scorpene submarine deal of 2005, and the Navy War Room leak of the same year. In the rice export deal, some 20 lakh tonnes were exported to a third country even though the consignments were meant for hungry Africans. In the Scorpene deal, Mukherjee as defence minister declined to order a probe into alleged payoffs. And in the navy war-room leak, the minister apparently claimed that a stolen pen drive had nothing sensitive in it, while the CBI said it contained classified stuff. While Team Anna has earned universal condemnation for its trigger-happy ways where it has gone after everyone - including the Prime Minister for the coal block allocation policy - the surprise this time is not that it wants Mukherjee investigated, but for what. [caption id=“attachment_347817” align=“alignright” width=“380” caption=“AFP”]  [/caption] The most important part of Mukherjee’s tenure as cabinet minister in UPA-1 and UPA-2 has not been as defence and external affairs minister, but as finance minister. During his three-and-a-half-year run in the ministry, he has not only driven the Indian economy into the ground, but his ministry has faced serious accusations of impropriety . Reason: the power wielded by his advisor in the finance ministry, Omita Paul . Mukherjee and his office have, among other things, been accused of batting for various corporate interests. Of these, the most damaging allegation was the one made by former Sebi whole-time director KM Abraham, who wrote a confidential letter to the Prime Minister in June last year alleging that the market regulator was being pressured by the ministry to “manage” cases involving Reliance, the Sahara Group and the Tayals of the Bank of Rajasthan. Abraham’s letter, obtained by Firstpost through an RTI query filed with the PMO, makes it clear that the pressure on Sebi Chairman UK Sinha came from “the big man” Pranab Mukherjee and the “lady” Omita Paul. Abraham wrote: “The admissions of the chairman in his own words about the need to ‘manage’ some of the cases now live in Sebi, about the interest that the Union finance minister has in some of them, the admission that Smt Omita Paul is behind what is happening, the difficulty that he (Sinha) is experiencing in interacting with key ministry officials – suggest to me that Shri Sinha is being pressured to intervene in several cases that are currently being dealt with in Sebi.” While the Sahara case went decidedly against the group, with Abraham ruling that the group should return all the public money raised by two group companies (the case in now in the Supreme Court after the Satellite Appellate Tribunal ruled in Sebi’s favour), the Tayals were let off the hook by revoking an interim ban on 100 Tayal group entities for violations of various Sebi rules. In the Reliance case , which involves alleged insider trading in the shares of Reliance Petroleum in the run-up to the company’s merger with the flagship, the media had reported that the company wanted to settle the case through a consent order, but the amount offered in settlement was apparently too little. The charge against Reliance, as Firstpost reported at that time, went thus: a bunch of promoter companies took short-positions in the Reliance Petroleum futures market when they knew the promoters planned to actually sell some of their shares. In short, they knew the market price would fall when Reliance Petro shares were sold, and tried to make money with this prior knowledge by selling in the futures market. Sebi has since changed consent order rules , but it is understood that the Reliance case can still be decided through a consent order. Abraham wrote in his letter to the PM: “What I see happening now is a calculated assault on the regulatory framework in Sebi. A message is now spreading that cases against the influential and the powerful might put officers in Sebi to undue risk and scrutiny…This will, in no time, incapacitate the investigative machinery in Sebi. Needless to say, it does not bode well for the safety and integrity of the markets and for investors.” Team Anna could not only bring up Abraham’s letter for a thorough investigation, but also the alleged interference of Omita Paul in key appointments. While several key officials who crossed the finance ministry – former Sebi chief CB Bhave and KM Abraham, among them – were denied extensions, Omita Paul is alleged to have had a hand in delaying the appointment of a full-time chairman for the UTI Mutual Fund after the previous incumbent – UK Sinha – was made Sebi chairman. Reason: she wanted her brother Jitesh Khosla to get the job , despite opposition not only from UTI’s strategic investor T Rowe Price, but also its public sector shareholders (SBI, LIC, Punjab National Bank and Bank of Baroda). Pranab Mukherjee may be UPA’s most respected trouble-shooter, but his track record needs additional scrutiny. Team Anna is on the right track, but has flogged the dead horses of Scorpene and rice exports when there are more interesting skeletons to rattle in the outgoing FM’s cupboard.