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Sebi chief warns of growing clout of companies

Tamal Bandyopadhyay & Janaki Krishnan

Barely 11 days before his retirement, the Securities and Exchange Board of India's longest serving chairman, D R Mehta, expressed disquiet over the growing power of corporations.

He also described his last year in office as the worst period in his long career and said he regretted having accepted a two-year extension after his five-year tenure expired in 2000.

Mehta retires on February 21, after a seven-year stint as chairman of the stock market watchdog.

In a freewheeling interview that spanned a range of topics, Mehta warned: "Most of the problems in the market stem from the fact that the corporate sector has become very powerful. Corporations are powerful in terms of their sheer size, their financial clout, and the other kinds of clout they exercise. The moment you start taking some action, they jump on you."

"I understand that corporates have to grow. Many of them have complied with Sebi regulations. But some of them are not used to the culture of compliance. The moment you do something - which is part of your duty - there is a personal attack," Mehta said.

The Sebi chairman also hit out against a former president of the Federation of Indian Chambers of Commerce and Industry. "The Ficci president openly criticised Sebi. Have you seen this happen in any part of the world? Can any company in the UK openly criticise the financial services authority? Does anyone in the US take on the Securities and Exchange Commission? Here these things happen."

Mehta is a former Rajasthan- cadre IAS officer who served, among other things, as Controller of Capital Issues and Director-General of Foreign Trade in New Delhi before moving to the Reserve Bank of India as deputy governor and then to his current post. He said his best job had been that of collector of Jaisalmer. The worst? "I would say this last one year at Sebi," Mehta replied.

Mehta has been under fire ever since the Sensex crashed after last year's budget in the wake of broker Ketan Parekh's problems. The market watchdog has been criticised for not acting early enough to tackle the market's problems last year.

"People here do not hesitate to launch personal attacks," Mehta rued. The Sebi chairman said he was happy that he was stepping down.

"I wish I had quit earlier, but I had to stay on because of the Joint Parliamentary Committee. One of the biggest mistakes I made in my life is that I sought an extension. Had I left in February 2000, when my first five-year term came to an end, this kind of problem would not have occurred. At the end of your career, you're told that you did not do this, you did not do that."

Mehta stoutly defended Sebi's track record, pointing out, among other things, that it had ushered in one of the most modern markets in the world, that it had compelled OTCEI to computerise - the National Stock Exchange had falsely claimed credit for this, he said - and had introduced the T+5 settlement system.

"We have 100 per cent online trading. Even the New York Stock Exchange does not have it. We did demat within three years. The US took 10 years or even more to achieve demat," he said. "Sebi has been a very active organisation. That has been part of the problem. Had we not been so active, there would not have been any problem," he added.

The Sebi chairman said he would be writing his autobiography and would work with the Jaipur Foot Trust after his retirement.

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