CBI begins probe against top Sebi man

NEW DELHI: The Central Bureau of Investigation has initiated an enquiry into the role of Chief Vigilance Officer of SEBI in connection with alleged weakening of a case against promoters of the Bank of Rajasthan (BoR).
Highly placed sources said CBI has registered a preliminary enquiry against CVO R K Padmanabhan, a 1991-batch IPS officer from Maharashtra cadre, for alleged weakening of the case and for other suspected irregularities in the SEBI probe against promoters of BoR.
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 the 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 per cent in June 2007 to 63.15 per cent in December 2009 whereas they had declared only 28.61 per cent shares.
It is alleged that the ill-gotten gains of the promoters by making wrong disclosures were nearly Rs 700 crore. SEBI subsequently imposed a penalty of only Rs 30 crore, whereas it should have been in the range of over Rs 2000 crore.
Without giving many details, CBI sources said the enquiry will focus whether the case was allegedly weakened by active participation of SEBI officials and the purported role played by Padmanabhan in that.
Last year, Securities and Exchange Board of India had slapped a fine on BoR's the 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 per cent at the end of three months period ended June 2007 to 28.6 per cent as on quarter ending December 2009 when actually it had increased to 63.15 per cent.
A group of minority shareholders in the Bank of Rajasthan have alleged serious lapses in the probe carried out by Padmanabhan.
The group had alleged that being CVO, he is looking into these complaints against himself which is a conflict of interest and against norms of CVC manual.