Apex court asks Govt to set up special court

Source :BL;PTI:NEW DELHI:Wednesday,dec 8th 16.45pm

 The Supreme Court has asked the Centre to consider setting up a special court to deal with the Rs 1.76-lakh-crore 2G spectrum scam.

A Bench of Mr Justices G.S. Singhvi and Mr A.K. Ganguly said there was a need for a special court in view of the magnitude of the offence as otherwise the objective of the prevention of Corruption Act and Foreign Exchange Management Act (FEMA) could not be achieved.

“Unless the Government is prepared to create a special court, purpose will not be served. It is the need of the hour, we must have exclusive courts to deal with these offences,” the Bench observed.

The Solicitor General, Mr Gopal Subramanium, admitted that the case needs special expertise and said that he would consult the Government and report back to the court.

“We have to get a special court if we want objective of the statue to be achieved. It cannot be done with existing manpower and infrastructure,” the Bench said.

The apex court pointed out that though the Government was enacting a number of laws, it was not creating adequate courts as the result of which the existing courts were over burdened and there was no way special cases like the present one could be dealt in an expeditious manner.

“The present courts are over burdened. Most important in this case is appreciation of evidence from a normal murder case. Here it is a conspiracy. That conspiracy angle has to be investigated. It needs expertise. When you enact a law, you should have tha t in mind,” the Bench observed. — 

2G scam: CBI raids residences of Raja, 4 officials

Source :BL: PTI:NEW DELHI/CHENNAI:Wednesday, December 8, 2010

The Central Bureau of Investigation today carried out searches at the residences of the former Telecom Minister, Mr A. Raja, in Delhi and Chennai besides carrying out raids at the premises of four other telecom officials, including his personal secretary, Mr R.K. Chandolia, in connection with the Rs 22,000-crore 2G spectrum scam.

CBI sleuths began the searches in the wee hours of the morning in Delhi and Chennai at the residences of 47-year-old Raja, who was forced to resign as minister on November 14 in the wake of CAG’s report that the rate at which 2G spectrum was allotted res ulted in a possible loss to the exchequer to the tune of Rs 1.76 lakh crore.

Raids were also carried out at the residences of former Telecom Secretary, Mr Siddarth Behura, Mr Chandolia, Member-Telecom Commission, Mr K. Sridhar, and the Deputy Director-General in the Department of Telecom, Mr A.K. Srivastava, CBI sources said.

Mr Raja has been maintaining that he was ready for questioning by the CBI any time.

The CBI sources said that the former minister would also be questioned during the process of searches.

The Supreme Court had come down heavily on the CBI on November 22 for failing to question Mr Raja and the Telecom Secretary in connection with the scam, saying it was “beating around the bush’’.

A Bench of Mr Justices G.S. Singhvi and Mr A.K. Ganguly wondered why the premier investigating agency failed to question the duo despite the CVC and CAG report sharply indicting them for their involvement.

“Any responsible person will question the involvement of the minister and the secretary and you (CBI) say that 8,000 documents have been examined. You are beating around the bush.

It was (questioning) minimum expected of the CBI. What do you take this court for,” the Bench had observed during the argument. —

INDIAN BANK PLANS FPO BY NEXT JUNE

SOURCE :4 DEC, 2010, 07.46AM IST,PTI 
 

..We will file the DRHP (draft red herring prospectus) with the market regulator Sebi by April and come out with the issue in end May or June," its Chairman and Managing Director T M Bhasin told reporters on the sidelines of the annual Bancon 2010 here today. 

Under the board resolution, the bank will issue 10 per cent fresh shares in addition to its current equity base of around 430 crore shares, he said, adding going by the current market price of the Indian Bank scrip,Public sector lender Indian Bank plans to come up with a follow-on public offer (FPO) by next June through which it plans to raise up to Rs 1,600-crore, a top official said today. 

"Our board has already approved the proposal (to go for an FPO). the issue size can go up to Rs 1,600 crore. 
The government, which holds 80 per cent equity in the Chennai-headquartered bank, will not subscribe for shares in the FPO, he said, adding the stake can come down by around nine per cent post-FPO. 

"The proceeds from the FPO will be used for augmenting its capital adequacy ratio and lend more to customers," Bhasin said, adding that currently, the total capital adequacy ratio of the the bank is 12.86 per cent which will go up considerably after the FPO. 

Meanwhile, Bhasin said the bank will achieve a credit growth of 29 per cent in the current fiscal and a deposit growth of up to 23 per cent, both of which are above the industry average. The RBI's credit offtake target for the year is around 19-20 percent. 

Unlike its peers, Indian Bank is not experiencing any crunch in liquidity currently and in fact is sitting on reserves of over Rs 2,000 crore, which will be disbursed this month, Bhasin said.

Tata-Radia conversations leakage unfortunate but inevitable: PC

Source :4 DEC, 2010, 04.49AM IST,ET BUREAU 


 Home Minister P Chidambaram on Friday said leaks of taped conversations were unfortunate but inevitable, and that such things tend to happen when there’s a major scam. 

“See, what was recorded was conversation of a person suspected to have violated tax laws. We were recording only one end of the conversation but, as it happens, the other end was also recorded. But I am afraid that when there’s a major scam and a major tax violation and such conversations are recorded, things tend to get leaked. It is unfortunate but some of this is inevitable,” Mr Chidambaram told ET NOW, this paper’s sister channel, at the sidelines of an award function for small and medium enterprises, organised by the broadcaster and Indiamart.com. 

Earlier this week, industrialist Ratan Tata had appealed to the Supreme Court against the leaks of his conversation with lobbyist Niira Radia .


 The petition sought an inquiry into the leaks “which are not remotely connected with the purpose for which the investigating agencies had conducted the tapping”. 

Besides Mr Tata, Ms Radia’s conversations with bureaucrats, journalists and other businessmen that were recorded by the income-tax authorities in connection with their investigations also found their way to the media and into the public domain. 


The government subsequently ordered an investigation into the issue and the Central Board of Direct Taxes (CBDT) is now probing how the tapes got leaked. 

No need to worry 

Replying to a question about concerns about whether scams and government probes would vitiate the business environment in the country, Mr Chidambaram said India Inc need not be worried. 

“It’s sad that there are some bad patches but as Professor Bhagwati said yesterday (Thursday), ‘let’s not exaggerate corruption’ . It is an issue which must be addressed and anyone involved in corruption must be punished. 

But I don’t think you should allow yourself to be drowned in this cacophony that everything is corrupt and everybody is corrupt.”

Sebi may tighten disclosure norms to check manipulation

Source :4 DEC, 2010, 11.16AM IST, SANTOSH NAIR,ET BUREAU 

 Amid several instances of market manipulation , capital market regulator Sebi may tighten disclosure rules to check operators and company promoters cutting bulk trades outside the regulator’s radar, feel fund managers and brokers. 

It is common knowledge in market circles that most promoters control undeclared investment arms through which they buy and sell shares of their companies. This helps them evade creeping acquisition norms and other mandatory disclosures. 

“It appears there is enough evidence with Sebi to show how open offer regulations have been side-stepped by purchasing shares through multiple entities carrying out bulk trades. It’s likely that Sebi may ask bulk trade participants to reveal themselves,” said a Mumbai-based broker. 

Recent investigations show that it’s possible for market operators to buy large blocks of shares well exceeding the open offer trigger limit of 15%. 

“In Sangam India , the Dangi group, along with Ashika Group on November 23, 2010, had provided an exit route to investors such as Swiss Finance Corporation (Mauritius) and India Advantage Fund-I which were approximately holding 23.01% share capital in the said company,” said Thursday’s Sebi report on share trader Sanjay Dangi and entities controlled by him, alleged to be rigging share prices in collusion with the promoters. Sangam officials were not available for comment. 

Broker-members are required to disclose to the stock exchanges all transactions for a client wherever the total quantity bought or sold is more than 0.5% of the equity shares of that company. This is referred to as a bulk deal. A block deal is one which is for a minimum of five lakh shares or a trade worth Rs 5 crore. 

Fund managers and brokers say that one way of curbing malpractices would be for the regulator to relax norms for block deals and ensure that large deals are done through this window. The block deal window on the BSE and NSE — for a minimum of 5 lakh shares or for trades worth Rs 5 crore — is open for only the first half an hour of the trading session. 

The transaction price can’t be more than plus or minus 1% of the previous day’s closing price, if the deals are struck right at the start of the session, or plus or minus 1% of the prevailing market price once trading commences for the day. 

Brokers say that when it comes to large trades in mid-cap stocks, many fund managers prefer to route the trades through the regular window. One reason is that the buyer may want to keep his identity secret. This is not possible, if the trade has been done through the block deal window: identity of both the buyer and seller has to be disclosed. 

Another reason, allege market watchers, is that bypassing the block deal window facilitates front-running — an illegal activity in which a trader takes a position in an equity based on advance information of an impending trade. 

“Bulk deals are always negotiated, with the broker(s) finding a counterparty before entering the order on the trading screen,” says a BSE broker , adding that promoters often use undeclared investment arms to absorb heavy selling in their stock from institutional investors. “But they buy in small chunks so as not to trigger the 0.5% limit for disclosing trades to the bourses,” the broker said. 

Last week, India Advantage Fund and Swiss Finance Corporation together sold around 90 lakh shares of Sangam. Of which, around 63 lakh shares were picked by Sanjay Dangi-controlled Pacific Corporate Services and Ashika Group-backed Withal Commercial. According to Sebi regulations, if entities or persons acting in concert acquire more than 15% in a company, they have to make an open offer for additional 20% of the company’s equity. 

In the case of Sangam India, the Dangi and Ashika groups were acting in concert, as the Sebi investigation showed. 

India Post to replace paper stamps with e-stamps for commercial services

Source :4 DEC, 2010, 04.53AM IST, SOUVIK SANYAL & HARSIMRAN JULKA,ET BUREAU 


 It may not ring a bell for a generation fed on emails and SMSes, but those who grew up sending and receiving letters and greetings will take note: paper stamps will be replaced by an electronic version in another two years. 

Licking and sticking will be a thing of the past with India Post deciding to use e-stamps for all its commercial services, including post cards, inland letters and registered post across the country, 156 years after British East India Company introduced the country’s first stamp featuring Queen Victoria. 

“The electronic form of postal stamps will fully substitute paper stamps in two years,” said an official with the ministry of communications and Information Technology. India Post currently has electronic stamping facility in select urban postal circles. 

The postal department is working with USbased consulting firm Accenture to prepare a detailed modernisation plan that includes shifting to the e-stamp system, which is already in place in several developed countries. 


India Post, employing 5 lakh people in more than 1.5 lakh post offices, is the largest postal service in the world. 

Benefits of e-stamps 

The move will help save printing costs and also help the department tackle the menace of forged paper stamps, which is rampant in several states, the official said, requesting anonymity. “There have been cases of revenue leaks due to postal stamps being forged in some parts of the country,” said the official, without getting into details. 


The department sold stamps worth Rs 606 crore in 2008-09 . It reported a loss of Rs 3,638 crore in 2008-09 after posting a 34% jump in expenditure to Rs 9,500 crore. Revenues grew only 6.6% to Rs 5,862 crore during the period. 

Its accumulated losses stand at Rs 7,640 crore. Some premium segment products such as Speed Post are already using bar coded stamps and several large cities have computerised post offices. But most parts of the country, including rural and semi-urban areas , use paper stamps. 

The postal department, established in the 19th century as India Post Office by the British East India Company , is one of the oldest government departments in the country. 


The tradition of postage stamps started in 1852 when the British introduced the Scinde Dawk stamps. These stamps, embossed on red wax wafer, were the first in Asian countries.


 By around 1872, the British military started using stamps extensively to send official mails. 

Besides shifting to e-stamps , the postal department has initiated other e-enabled services to survive in a world that is going the digital way, particularly in the communications space. Its e-post service, for instance, allows sending of messages through email to be printed at post offices near to the address.

Indian banks should target global acqusitions: Subbarao

 


Source:4 DEC, 2010, 05.08AM IST,ET BUREAU 




Reserve Bank of India Governor Duvvuri Subbarao has revived the debate on global acquisitions by Indian banks, after a two-year hiatus, suggesting that local lenders would be able to pick up some valuable firms from the global financial wreckage. 

The governor tempered the likely euphoria, saying that banks should be opportunistic in buying in regions with business potential and at attractive valuations , which would come with associated risk. He neither specified the regions nor valuation parameters. 

“Notwithstanding the risks involved ... some of our larger banks (should) be looking out for opportunities for consolidation both organically and inorganically,’’ Subbarao said at an annual bankers’ conference.


 “They should look (at)... regions which hold out a promise of attractive acquisitions. Indian banks should increase their global footprint opportunistically even if they do not get to the top of the league table.’’ 

The need for global expansion of Indian banks is necessitated by the rising aspirations of domestic companies to buy up assets as also rising trade with other emerging markets such as Indonesia and African nations. 

On treatment of foreign banks in India , he left the door wide open, saying the soon-to-be-released discussion paper would address it, but said mandating incorporation of subsidiaries alone is not necessarily the safest net. 

Former Finance Minister P Chidambaram had advocated consolidation among Indian banks and acquisitions overseas, including an audacious bid for the then sinking Citigroup by State Bank of India . 

Domestic banks reluctant 

Many international financial institutions were trading at throwaway valuations during the 2008 credit crisis. But domestic banks have been reluctant either because they do not have the bandwidth to buy, or see better opportunities in the local markets.


 The domestic banking industry is heavily controlled, unlike in the West where loose regulations nearly collapsed the global financial system because of the mortgage crisis in the US. 


Indian banks mostly deal with plain vanilla loan products and stay away from exotic derivatives, the main revenue stream for the Western financial companies.