Why CBI can't crack economic crimes: It's birdbrained

If you believe that the CBI’s only problem is that it is the government’s “caged parrot”, you’re wrong. It has an even more avian affliction: it is birdbrained. Frankly, there is no other explanation for its decision to begin a preliminary enquiry into the decision-making of former Sebi chairman CB Bhave and former SEBi Member KM Abraham. Apparently, the CBI is suspicious about the manner in which Bhave and Abraham gave permission to MCX-SX, promoted by the now tainted Jignesh Shah, to begin trading in currency futures. If only the CBI had cared to make some informal enquiries, they would have found out that Bhave and Abraham’s Sebi resisted (despite considerable pressure) granting a licence to MCX-SX to operate as a full stock exchange. Sebi had rightly expressed concern about MCX-SX’s promoter-dominated shareholding patterns which were in clear violation of the MIMPS (Manner of Increasing and Maintaining Public Shareholding) rules. Still, in the interest of allowing competition to the National Stock Exchange, Bhave and Abraham allowed MCX-SX to trade in currency futures. Both Bhave and Abraham have impeccable credentials — Abraham is the man who nailed Subroto Roy Sahara. Interestingly, neither of the two men was given extensions to their three year terms in office, a fate usually reserved for public officials of the highest integrity. [caption id=“attachment_1434745” align=“alignleft” width=“380”] Representational image. Ibnlive[/caption] There is no political capital in targeting Bhave and Abraham. It is unlikely that the CBI has been directed to go after them by higher authorities. That leaves stupidity as the only reasonable explanation for CBI’s actions. If the CBI is being logical, why is it not investigating UK Sinha and the current members of SEBI who gave MCX-SX the permission to launch a full-fledged stock exchange? Why has it not charged the former Chairmen of the Forwards Market Commission under whose watch the NSEL scam took place? Logic has taken a back seat to economic illiteracy. Clearly, the Indian Police Service Officers who man the CBI need urgent lessons in Economics 101 and Finance 101. And not just because of Bhave and Abraham. CBI cannot expect to solve any major corruption case without in-depth knowledge of how to trace money-trails, not just in India but in the world. Again, there is no special cadre in the police for this. India’s policemen are still trained to tackle law and order problems and regular crime. In fact, if there is one agency which has the expertise to crack down on complex economic crimes, it is SEBI, the very body being targeted by the illiterate CBI. It isn’t just the CBI. The entire government system which deals with crimes of an economic nature needs a few beginners’ lessons in the domain of their operations. Is it not incredible that the one economic crime which should have been most easily solved — that of Ramalinga Raju and the Satyam fraud and only because he confessed — is still languishing? It ought to have been an open and shut case for the investigating authorities. But like the CBI which is populated largely by Indian Police Service officers, the Serious Frauds Investigations Office is staffed largely by Indian Revenue Service officers whose expertise is in tax, not complex corporate fraud. Other government agencies that handle economic crimes or even wrongdoing are equally unsuited for the task. The Comptroller and Auditor General is staffed by the Government’s Audits and Accounts cadre, but curiously is always headed by an IAS officer, who in most cases has no great knowledge of auditing and accounting. The approach of CAG chiefs to even routine audits vacillates between an over eager anti-Government position or an over-subservient pro-Government position. When there is no expertise, judgment cannot be sound. Similarly, the Enforcement Directorate, which examines and investigates money laundering, is always headed by a non-specialist IAS officer and staffed with many Indian Revenue Service officers who are only partly successful in nabbing tax evaders, forget the more complex task of nailing money launderers. In the end, what India has is a system with zero IQ for cracking down on serious economic offences. Perversely, it targets the few good men that the system has. Bhave and Abraham deserve better. So does India.