New Delhi: CBI has started an inquiry into the role of the Chief Vigilance Officer of Sebi in connection with alleged weakening of a case against promoters of Bank of Rajasthan (BoR) which was being probed by the regulator and other suspected irregularities in the investigations.
Highly placed sources here said CBI has registered a preliminary enquiry against CVO R K Padmanabhan, a 1991-batch IPS officer from Maharashtra cadre, for alleged weakening of case against promoters of BoR which was probed by Securities and Exchange Board of India.
Email seeking Padmanabhan's response on the development and allegations related to weakening of the case remained unanswered. His office said he was out for some meeting. He also did not respond to messages and calls seeking his reaction.
A Preliminary Enquiry (PE) is an initial probe in which CBI looks for veracity of allegations and grounds for filing an FIR. No arrests or questioning is done under a PE.
It is alleged that securities market regulator did not levy adequate penalty on the promoters of Bank of Rajasthan who had made fraudulent declarations about their shares held in the company. BoR was acquired by ICICI Bank in 2010.
The sources said, on the basis of complaints received by the agency against Padmanabhan, who is also Executive Director in Sebi, CBI has decided to carry out a preliminary enquiry.
Sebi was probing alleged wrong disclosures made by promoters of BoR about their shareholding in the company.
Sebi had found that shareholding of promoters of BoR had increased from 46.8 percent in June 2007 to 63.15 per cent in December 2009 whereas they had declared only 28.61 percent shares.
It is alleged that while ill-gotten gains of the promoters by making wrong disclosures were nearly Rs 700 crore, Sebi had imposed a penalty of only Rs 30 crore whereas it should have been in the range of over Rs 2000 crore.
Without giving much details, CBI sources said the enquiry will focus whether the case was allegedly weakened by the active participation of the Sebi officials and the purported role played by Padmanabhan in that.
Last year, Securities and Exchange Board of India (Sebi) had slapped a fine on BoR's then promoter Pravin Kumar Tayal, his brothers--Sanjay Tayal and Navin Tayal--and his son, Saurabh Tayal--for violation of norms.
Sebi had found that then promoters of the bank along with some companies that were connected to him and his relatives, had publicly announced that their stake had come down from 44.18 percent at the end of three months period ended June 2007 to 28.6 percent as on quarter ending December 2009 whereas it was increased to 63.15 percent.
In February this year, Securities Appellate Tribunal had upheld the penalty of Rs four crore each on BoR's promoters--Sanjay Kumar Tayal and Pravin Kumar Tayal.
However, a fine of Rs one crore imposed on each of them by Sebi was set aside. The penalty was slapped for non-compliance with the market regulator's summons.
A group of minority share holders in the Bank of Rajasthan have alleged serious lapses in the probe carried out by Padmanabhan who is also holding the charge of Chief Vigilance Officer in Sebi.
The group had alleged that being CVO, he is looking into these complaints against him which is a conflict of interest and against norms of CVC manual.
