Lokpal seeks response from SEBI chief
Context:
Recently, the Lokpal sought an explanation from the chief of India’s stock market regulator, Madhabi Puri Buch, on the conflict of interest charges levelled against her in three separate complaints that cited a recent report from the U.S.-based shortseller firm, Hindenburg Research.
Relevance:
GS-02 (Indian Polity)
Dimensions of the Article:
- Background
- What are Lokpal and Lokayukta?
- Structure of Lokpal
Background:
- The 2023 Hindenburg report had previously alleged the Adani groups about stock price manipulation and accounting fraud.
- Later, a six-member committee was formed by the Supreme Court to look into the allegations concerning the Adani groups.
- The court specifically informed the SEBI to investigate if there was any stock price manipulation or any such other discrepancies under the minimum public shareholding norms in public limited companies.
- The SEBI later informed the Supreme Court that it had not found any evidence of money flow violations from offshore entities into Adani companies or of any other allegations.
- Consequently, the Supreme Court upheld SEBI’s investigation, rejecting the need to form a SIT or the involvement of CBI on the matter.
- Hindenburg’s new allegations against SEBI chairperson Madhabi Puri Buch and her husband point out that the couple hold hidden stakes in offshore funds in Bermuda and Mauritius, which are linked to the Adani Group’s alleged stock manipulation.
- It asserted that this might explain SEBI’s reluctance to take meaningful action in the ongoing Adani investigation.
- The allegations also focus on Ms. Buch’s professional engagements. Hindenburg claims that she retained ownership of her consulting firm, Agora Partners Singapore, during her tenure at SEBI, only transferring it to her husband’s name after becoming SEBI Chairperson.
- Furthermore, Hindenburg accuses her husband, Dhaval Buch, of benefiting from his role as a senior advisor at Blackstone, alleging that SEBI’s policy changes under Ms. Buch’s leadership favoured Blackstone’s interests in India’s real estate investment trusts (REITs).
What are Lokpal and Lokayukta?
- Lokpal and Lokayukta are statutory bodies under the Lokpal and Lokayukta Act, 2013.
- Lokpal is for the Union, and Lokayukta is for the States.
- They perform the function of an “ombudsman” and enquire into allegations of corruption against certain public functionaries and for related matters.
- The Lokpal and Lokayukta Act, 2013 was amended in the year 2016—the Lokpal and Lokayuktas (Amendment) Act, 2016.
- It amended Section 44 of the 2013 Act that deals with the provision of furnishing details of assets and liabilities of public servants within 30 days of joining the government service.
- Currently, the public servants shall declare their assets and liabilities in the form and manner as prescribed by the government.
Structure of Lokpal:
- Composition: One chairperson and a maximum of eight members.
- Chairperson Eligibility: Must be either a former Chief Justice of India, a former Supreme Court judge, or an eminent individual with at least 25 years of expertise in fields like anti-corruption policy, public administration, vigilance, finance, law, or management.
- Members: Half of the members are judicial (former Supreme Court judges or former High Court Chief Justices).
- At least 50% of the members should be from SC, ST, OBC, minorities, or women.
- Non-judicial members should have 25+ years of expertise in relevant fields.
- Term of Office: Chairperson and members serve a 5-year term or until reaching the age of 70.
- Appointment Process: Members are appointed by the President based on recommendations from a selection committee.
- Selection Committee Composition:
- Prime Minister (Chairperson)
- Speaker of the Lok Sabha
- Leader of Opposition in the Lok Sabha
- Chief Justice of India or a nominated judge
- One eminent jurist
- Search Panel: The selection committee forms a search panel of at least eight members to shortlist candidates for the Lokpal.
Conclusion:
The Lokpal’s inquiry into SEBI chief Madhabi Puri Buch highlights the significance of accountability and transparency within regulatory bodies, particularly in sensitive cases with far-reaching implications for market integrity. This development underscores the essential role of oversight mechanisms such as the Lokpal in upholding public trust and addressing potential conflicts of interest in the nation’s institutions.
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