"I am submitting the following with considerable anguish and pain....But such is the gravity of the situation that I make myself bold to do so, and entreat your kind indulgence."
So wrote K.M. Abraham, former board member of the Securities and Exchange Board of India (SEBI), and the man who investigated the Sahara scam, to the Prime Minister on June 1 2011.
The letter went on to say:
"The frightening realization that dawned on me from all this was that at the highest levels in government, there seemed to be an awareness of misuse of power by the office of the finance minister. But there was a clear unwillingness or reluctance to prevent it or take any remedial action. It was then I decided to address (the Prime Minister)… because I knew that I had nowhere else to go.”.
"I have attempted to place before the honourable prime minister only those facts that I myself know with certitude, which are first hand and not hearsay in nature. I am willing to testify to the above facts, under oath in any appropriate judicial or administrative forum, should I called to do so"
These excerpts only go on to underline what is an open secret: that India has created more protective layers around the guilty, and no protection for its honest officers. Left with little choice, many officers give in and become a part of the corroded system. The few who defy and stand up, suffer. The saga of taking the Sahara boss to Tihar is strewn with pain, harassment and demotion of one such honest officer.
K.M. Abraham is a rarity, not the kind who'd would give in. While Abraham was fighting to bring Sahara to book, our great system—represented by ministry of law, BSE, ministry of finance, Income Tax department and even the PMO—was busy otherwise.
If Abraham wanted, he could have had the world at his call. He was one of the best qualified men—an IIT from Kanpur, a CFA (USA) and a PhD from University of Michigan. It is our fortune that he chose to serve India. Once the SC order is implemented and Sahara group coughs up, it would reduce the current account deficit by about 30000 crores. That is 0.6% of GDP, the target set by Chidambaram. Alternatively, the money involved is enough to build 6 million homes for the homeless.
Instead of being appreciated, what he encountered, when hot on the trail of Sahara, Reliance, MCX, BoR, ADAG, should become widely known:
- Finance ministry, headed by Pranab Mukherjee gets interested in the cases investigated by him. They pull strings, through UK Sinha, the chairman, SEBI. Omita Paul, Secretary in MoF tries to control the outcome of these cases.
- Income Tax Department, under instructions of MoF, instead starts a roving enquiry against Abraham. The allegation is that Abraham and one more SEBI member bought a flat at below market price with unknown sources of funding (Later proved as funded from a Loan). SEBI had already investigated the same and termed them as 'baseless' charges, made by 'anonymous' complaints.
- The Bombay Stock Exchange gives a letter that suggests that optionally fully convertible debentures (OFCDs) cannot be listed, thus trying to buttress the Sahara claim and against the jurisdiction of SEBI to investigate the matter.
- The ministry of corporate affairs (MCA) headed by Salman Khurshid takes a stand that unlisted entities like Sahara are controlled by MCA and not SEBI. Sahara desperately wanted to move away from SEBI and report to MCA under Salman Khurshid.
- Finally, under tremendous pressure, personally and professionally, Abraham writes to the Prime Minister the letter quoted above.
- The PMO acts very callously, against all whistleblower norms. They pass the letter to Department of Economic Affairs, a wing of the finance ministry. They also leak it to the media. Later, TKA NAIR, a senior officer in PMO advises Abraham to meet Omita Paul in MoF, the very person whom he has complained against.
- A whisper campaign starts against Abraham , that he has lost his mental balance and is imagining things.
- Abraham doesn't give in and continues on his mission, doggedly and meticulously, building a case that will stand judicial scrutiny. Eventually, his 99-page order, put together under hostile conditions of extreme pressure demolished all the false defences put up by Sahara’s lawyers.
- The order against Sahara on 23rd June 2011. It was a water tight case, with every argument of Sahara, BSE, MCA, law ministry demolished systematically. SAT and Supreme Court could go no further than his order to bring Sahara to pay up.
- And soon, in July 2011 KM Abraham was transferred out of SEBI and repatriated to his home cadre, Kerala, one month after he passed the Sahara order. This was despite a SEBI board recommendation for extension of services which the MoF rejected.
KM Abraham is now serving as additional chief secretary, Government of Kerala. SEBI and India lost in the process, even as the later Supreme Court judgement of August 2012 and its order now vindicates this honest officer's stand three years back.
Former Outlook publisher Maheshwer Peri now runs Pathfinder Media, the magazine company which publishes Careers 360.