SEBI chief must go now

It is irrelevant whether Buch is eventually found guilty or not. Her continuance at the helm of SEBI undermines it.

It is time to end the misery of Madhabi Puri Buch, the Chairperson of India’s market regulator, the Securities and Exchange Board of India (SEBI). It is time to ask Buch to go, if she has not sent in her resignation already. Indeed, it is in her interest that she quits and faces an impartial inquiry, rather than continue to sit at the helm of a critical regulatory institution and see herself and the institution undermined in a way the SEBI has never been before. There are those defending her conduct, but only half-heartedly, calling the allegations a game of politics or of vested interests. But it should be clear at this stage of the ballooning scandal that none of these defences cut ice. 

We have reached a stage where SEBI has been robbed of the confidence and moral standing it needs to function and carry out even the most basic of regulatory functions. The preamble of The SEBI Act, 1992, lays down its charter: “... to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto.” This is a task beyond SEBI under the current circumstances. It can be safely said that the Chairperson of SEBI has brought SEBI to its knees. 

It is irrelevant if the charges against her will be proven and if she will eventually be found guilty or not. There is already enough in the air that raises questions that will not be easily dismissed. The external pressure is compounded by an internal revolt in SEBI that instead of being taken seriously, given that it points to an alleged toxic culture, is being countered with sorry and laughable explanations. To say, as SEBI insiders from the establishment have suggested, that class ’A’ officers of SEBI were misled by external elements, is to insult the entire SEBI workforce. 

The officers surely know what they are talking about. To anyone who knows how the Indian system works, it takes a lot of courage and gumption to get together to speak against the powerful. Buch, untouched despite the entanglement cited with Adani-related funds and the Hindenburg allegations, is reckoned to be close to the powers that be. That the officers have managed to protest against such a person is only an indicator of the extent of the rot that has forced them to speak up at the risk of being targeted. Protests are rare in a culture that is hierarchal, top-driven, boss-obsessed in the public sector, and dissent-killing in the private sector. SEBI seems like a hybrid --- it has brought the worst of both worlds to the workplace.

From a political lens, it is critical that the BJP stops defending Buch and gives in to a full-fledged inquiry. Political strategists of the BJP will see that the political cost of allowing her to continue in her position grows with each passing day. That, however, is a limited question of the BJP soiling its image, then managing its woes and responding to fallouts from the rottenness of the cronyism that it has delivered. The larger question is of where India stands today and how key institutions are undermined under this kind of a leadership.

It is undeniable that Buch could not have worked the way she allegedly has without political cover. This is what amplifies the power of people in some key positions, enlarges their sphere of influence, and lends a sense of adventurism, a gung-ho-ism and an arrogance that we see come crashing down every once in a while. 

Who can, after all, question the all-powerful Chairperson of SEBI? Five years ago, the question was different: Who can question the all-powerful Chairperson of ICICI Bank? That was Chanda Kochhar, refusing to quit till the bank could hold on no more and sacked her (“termination for cause”) in the light of the findings against her recorded by the Justice B N Srikrishna Committee.

Interestingly, both cases emerge from managers with roots in ICICI Bank. Buch and Kochhar rose at ICICI Bank under K V Kamath, the man who brought aggression to what was an easy-going project finance company in the public sector and saw it become at one point the largest private sector bank of the nation (since then beaten by HDFC bank). Those were the days Kamath and ICICI fantasised about becoming a top global bank. Aggressive business methods brought a new sense of energy, quick growth, but also practices that many would question. It turned key personnel into millionaires and delivered the managers like Kochhar and Buch (and many others unnamed). Buch joined ICICI Bank in 1989. In 2006, she joined ICICI Securities and led it as the CEO from 2009 to 2011. The company was later delisted, with many questions asked of ICICI Bank and SEBI’s conduct in the process. SEBI was accused of favouring ICICI, allowing in effect a violation of rules by ICICI to go unpunished. 

Generally speaking, SEBI has in many ways been unable to keep its independence from the government, unlike the RBI, which has at least attempted to strike an independent chord. Yet, the RBI man on the SEBI board, like others, has kept his silence so far. SEBI and RBI are both statutory bodies. The RBI website’s URL is rbi.org.in; SEBI’s is sebi.gov.in --- one at least proclaims to be separate from the government, while the other headlines itself as a part of the government, or so it seems. And thereby hangs many a tale!

(The writer is a journalist and faculty member at SPJIMR. Views are personal) (Syndicate: The Billion Press)