CBI searches homes, offices of 3 SEBI officials

PALAK SHAH Mumbai | Updated on March 22, 2021

The Saradha chit fund scam case is back to haunt market regulator SEBI. Nearly five years after the key accused in the scam revealed in their statement that huge bribes were paid to senior SEBI officials to look the other way, the Central Bureau of Investigations (CBI) conducted searches of residences and office premises of three SEBI officials.

Thousands of crores were collected through the Saradha ponzi schemes in violation of SEBI rules, the Companies Act and other anti-moneylaundering norms. Only SEBI-registered fund managers can collect investor money.

The SEBI officials are in the rank of chief general managers and also involved those who were posted in West Bengal, sources said. After the scam came to light around 2013, SEBI moved at a snail’s pace and no particular action was taken for years. The CBI case is based on the premise that SEBI action was deliberately delayed.

Internal note

According to an internal SEBI note, which is in possession of BusinessLine, in a 2010 meeting the Central Vigilance Commission (CVC) had with the then SEBI chairman the slow progress in cases pending with SEBI was highlighted. The internal note to SEBI officials says the CVC had advised SEBI to fast track the final orders after passing the interim order.

The note says that the CVC specifically wanted SEBI to give priority “to cases involving large number of investors, VIPs, cases referred to it by agencies like the CBI, those which are subject matter of frequent RTIs, where directions, observations have been issued by tribunals and courts and those highlighted by the media.”

The Saradha chit fund scam ticked all these boxes, yet SEBI’s actions were slow.

In February 2015, hearing the Saradha case, the Supreme Court had come down on SEBI and the RBI and said that regulators were “largely responsible for scams of such magnitude not just taking birth but flourishing unhindered”. The Court had also said that “all guilty officials who connived have to be investigated. There should be nothing outside the scope of investigation.”

Reading out a synopsis of investigations, the apex court said that they suggest that “regular payments towards bribe were paid through middleman to some of those who were supposed to keep an eye on such Ponzi companies.”

Many prominent personalities, including politicians, MLAs and MPs, have been accused of involvement in the scam.

The case had gone into the cold storage of the CBI and the ED, too, but resurfaced after Home Minister Amit Shah last week said all the links in Saradha scam would be investigated fully. Shah has been campaigning for the BJP in Bengal for the upcoming Assembly elections.

The Saradha scam is a political hot potato since it is alleged that it could be linked to the TMC government.

Published on March 22, 2021

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