SEBI avoiding investigations against Tatas, says Subramanian Swamy

BJP MP Subramanian Swamy has accused SEBI of avoiding and evading investigations into insider-trading in Tata Group companies and relying on self-certification or denial of wrong doing by interested parties to close serious complaints without its own investigation. He has accused SEBI of trying to exonerate Tata enterprises without investigating eight month old charges.

In a letter dated September 28 addressed to SEBI Chairman Ajay Tyagi, a copy of which has been reviewed by BusinessLine , Swamy said the regulator was not fulfilling its lawful responsibility of investigating insider-trading charges “just because the complaint was against Tatas.”

In a petition filed with the National Company Law Tribunal (NCLT) on December 20 last year, former Tata Group Chairman Cyrus Mistry had accused Ratan Tata of having sought price-sensitive information from the group companies and even influencing key decisions in the functioning of the conglomerate at a time when he did not have any managerial role. Also, Swamy separately wrote to SEBI levelling insider trading charges against Tata group.

Swamy’s letter says that SEBI had advised the companies to place all allegations before their respective audit committees and hence the regulator was asking those accused and interested parties to act against themselves.

Tata Son, holding company of Tata Group, did not comment. An e-mail sent to SEBI did not receive any response. Swamy said the audit committees of Tata Steel, Tata Motors and Tata Chemicals were not legally constituted as they did not comply with the provisions of the laws and regulations for the definition of an independent director. The letter also said the provision of an independent chairman of the audit committee has not been complied with by Tata Group firms. The Chairman of Tata Motors and Tata Chemicals was clearly not independent due to his being the trustee of the Sir Ratan Tata Trust, promoter of the companies. Swamy said SEBI had ignored this fact that the companies themselves had stated to their shareholders.

According to the letter, SEBI replied to Swamy saying that “companies intimated (to SEBI) that their audit committee have conducted meetings and they had not observed any violation or non-compliance of any of the provisions of SEBI’s Listing Obligations and Disclosure Regulations.

“Audit committee, whose members are interested parties in the allegations being made against them, have no role to play in an investigation which is the responsibility of SEBI. The regulator has wrongfully accepted or relied on statements which are self-certification by interested parties,” Swamy alleged.

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