Manas Dasgupta
NEW DELHI, March 9: A Delhi court on Wednesday took strong exception to the Central Bureau of Investigation (CBI) probing into the 2018 National Stock Exchange manipulation scam in a snail’s pace and expressed the apprehension that this could lead to the investors losing faith in India and would prefer to go to China.
Reprimanding the CBI for not moving fast enough, the judge Sanjeev Aggarwal pointed out that four years have lapsed since the agency began studying the wrongdoings involving the exchange’s top officials including then CEO Chitra Ramakrishna. She was arrested on March 6 from Chennai; her then adviser, Anand Subramanian, was arrested only on February 24. The court also send Subramanian to judicial custody till March 23.
“Who will invest in India with scams like this,” judge said in frustration about the sensational case involving deep corruption at the NSE. Criticising the slow pace of CBI investigation, the court said, “Will this go on for years? The CBI investigation is open ended, and goes on for years… All our credibility will go. They will all go to China.”
The judge asked, “What is the magnitude of this case? Rs 1,000 crore? I don’t know. The volume will be big. It is not a small scam. The reputation of the country is at stake. People invest their money in India. They think the NSE is fair. If they come to know that something fishy is going on, who will invest money? You are taking this investigation very lightly.”
The country’s markets regulator, SEBI, should also be investigated to determine if it took any action to block and then punish the corruption, the special CBI court said. The NSE was the country’s biggest bourse.
In 2018, a select group of traders were allegedly given unfair access to NSE’s servers to speed up algorithmic trading – through the co-location facility (where brokers can buy ‘rack space’ for their servers) at the NSE, early login and ‘dark fibre’, which can allow a trader faster access to the data feed of the exchange. This allowed them to transact earlier than other traders. CBI officials have in recent weeks visited market regulator SEBI’s office in Mumbai to collect documents related to the case. Notably, even a split-second edge is considered capable of bringing huge gains to a trader.
What is known as the “server case” turned into a high-drama headline a few weeks ago with the discovery that Chitra Ramakrishna, while in charge of the NSE, shared confidential information with someone she described as a Himalayan yogi. Emails show her seeking advice from the same outsider. This was revealed in a February 11 order by SEBI that highlighted corporate governance lapses at the exchange
The SEBI order said the former CEO “arbitrarily” appointed Anand Subramanian as her adviser, adding he had “no relevant experience.” He was given the role of Chief Advisor to MD of NSE along with a salary vastly disproportionate with his experience. Chitra Ramakrishna told SEBI during the probe she did not compromise integrity of the exchange. The union Finance Minister Nirmala Sitharaman has said the government was looking at whether SEBI took adequate action in the NSE matter.
The regulatory order said Chitra Ramakrishna — who quit as CEO in 2016 — was “merely a puppet” of someone she described as an unnamed yogi in Himalayas who “would manifest at will.” SEBI has said the former CEO made “incorrect and misleading submission” about the existence of a yogi. Ernst and Young Audit had said the yogi was none other than Anand Subramanian.
CBI has also told the court that the agency’s investigation has revealed that it was Anand Subramanian who created the email ID ‘rigyajursama@outlook.com’ thorough which he was communicating with Chitra Ramakrishna. Agency has also told the court that Chitra Ramakrishna introduced non-existent person (referring to Yogi) to mislead the investigation.
The judge asked if the CBI had taken Subramanian to different locations as part of the investigation when he was under its custody. The agency submitted that the accused was at the CBI office all this while and he was also confronted with Chitra Ramakrishna but “nothing fruitful” came out of those interactions. The court then remarked, “You did not take him to the scene of crime. You are sitting here in the CBI office, you can relax. What about the role of the SEBI? It is a capital market watchdog. Does it only growl or can it bite also?”
Aggarwal also questioned the role of the resident auditors of the NSE, and said, “One year they can miss. How could they miss for 5-6 years? It is not possible that the brokers who were disadvantaged were not bringing forward their complaints.”
The judge observed that Ramakrishna had come to the CBI office and “was served coffee and later arrested”. “Is there a divine power at play here. Something supernatural?” he asked.
The court also said that the previous MD was questioned and let off and it asked the CBI if it interrogated the I-T heads too, adding that the scam “would not happen without them.”
The judge pulled up the CBI for not mentioning in its application that Ramakrishna and Subramanian were confronted with each other. “You are pulling wool over my eyes. You are treating them very gently…” The agency told the court that a 30-member team was constituted to investigate the matter.
Advocate Vishnu Mohan, who appeared for Subramanian, told the court that the scam took place between 2010 and 2014, and that the accused became the NSE secretary in 2013 and he was not a technical person. The court said the “conspiracy may have ended in 2014, but it was too early a stage to give him a clean chit.”
The CBI had booked Sanjay Gupta, owner and promoter of Delhi-based OPG Securities Pvt Ltd, and others in the case. According to the CBI, Gupta abused the NSE server architecture between 2010 and 2014, in a criminal conspiracy with unknown officials of the NSE and even bribed SEBI officials.