Allegations of illegitimate interference by Ms Omita Paul
There are some serious allegations relating to the doings of Ms Omita Paul. Ms Omita Paul appointment as advisor with the rank of secretary with a tenure that was concurrent with the tenure of Mr. Pranab Mukherjee in different ministries meant that she was both de facto and de jure the number two person in the Ministry. This fact can be ascertained from the various secretaries that worked with or under her and also by the noting in the file where her word prevailed. These senior secretaries had to suffer on account of her appointment as she was not only junior to them but less knowledgeable or competent.
She was neither elected by the people nor selected to the IAS cadre by the UPSC and yet she came to occupy the second most important position in three key ministries of the cabinet. No known guidelines or law was followed in her appointment which was arbitrary exercise of discretionary power. In fact the provisions relating to equality in the Constitution were given a go by.
It will not be wrong to describe her appointment as illegal.
It is for this reason that the information relating to provisions of law under which she was repeatedly appointed and the file with noting on her appointment has not been revealed under RTI.
The track record of the functioning of Omita Paul shows that she has misused her exalted position in the Finance ministry for blatant nepotism, for depriving extensions of tenure to senior officers only because they were honest and competent appointing a corrupt person to the sensitive post of chief of the capital market and lastly influencing the decision making process to companies involved in securities fraud.
Does she act on her own behalf or on behalf of Mr Mukherjee? Is she a lobby centre for corrupt corporation? Or is she a buffer to take the heat off any scandal/wrong doing? And what is the reason for Mr Mukherjee helpless when blatant act of her nepotism and corruption are reported in the press?
Whatever be the reason, the constructive responsibility is that of the Minister himself!
First the obvious question: What is the reason for the appointment of Ms Paul in the number two position in the three key Ministries that Mr Mukherjee has been a Minister
Ms Paul has been continuously appointed as an advisor with the rank of secretary in the three key Ministries – Foreign, Defense and Finance- which has been co terminus with the tenure of Mr Mukherjee. Her appointment as Advisor in three different ministries is without precedent in Independent India and it is difficult to believe that she has specialized knowledge in three different areas to merit such appointment.
All attempts to get information on the law/guidelines under which she was appointed and the papers on her appointment under the RTI have been in vain.
It is an arbitrary appointment for arbitrary goals. Even the secretary of the Ministry is subordinate to her!
Though there have been extra constitutional authorities and power centres in the past an official power centre like that of Ms Paul the country has not known.
It may be mentioned that Ms Paul was also appointed as Information Commission at the time of election between UPA I and UPA II and that the then leader of opposition Shri Advani and the Prime Minister in May 2009 found time to select her as Information Commissioner for five years. The post of Information Commissioner was an insurance cover in case the Congress lost the election. She worked for eight days and disposed a total of 58 cases before re-joining as Advisor cum secretary in the Ministry of Finance once UPA came back to power.
That Ms Paul acts as an independent power centre, and works for the benefit of herself, her family members and the corporate lobby and in the process compromised national interest is obvious from the incident relating to appointment of SEBI chief.
She manipulated the entire system in order to have her candidate, a corrupt person Mr U K Sinha appointed to the post of Chairman of SEBI so that he would favour companies like Reliance and Sahara. It would also enable her to have her brother appointed to the post vacated by Sinha having emoluments of four crores, even when her brother did not have the basic qualification to be appointed to the post.
But first her role in removing honest officials from SEBI to install Mr Sinha:
The decision to give extension to the existing Chairman and members of SEBI by the secretary and the Minister ( approved on 19/10/09)was cancelled on her behest ( 21 and 22/12/09), the existing members were never considered later for extension (10/8/10), she changed the composition of the committee to select the Chairman, had her own experts nominated to the Committee (25/8/10), ensured that the candidature Mr U K Sinha is by the so called search route. The search route was taken to conceal the illegal emoluments of Rs 4 crores drawn by Mr Sinha in a PSE which would have disqualified him for the post on grounds of integrity. It would also enable her to push the candidature of her brother who could enjoy the lavish salary without others knowing the real reason for pushing his candidature
After having Mr Sinha selected as Chairman Ms Paul ensured that the even the Appointment Committee of the Cabinet does not come to know the emoluments of Sinha while confirming his appointment. .( Refer confidential letter DO no 2/23/2007-RE dated 13/12/2010 of Dr Thomas Mathew, to Est Officer Annexure -1 item 4 (ii) Scale of pay : Not available)
It is obvious that the concealment of Mr Sinha’s emoluments was deliberate and designed to mislead the selection committee and the ACC to presume that he was being paid the maximum pay payable to a PSU chief of Rs 1.25 lacs/pm.
Mr Sinha’s emolument were over Rs four crores per annum (3.62 crores for 10.5 months as per balance sheet of UTI AMC) which is not possible in a public sector organization like UTI AMC. The Establishment Officer vide his order dated 4/1/08 had stated that the deputation was covered under Rule 6 (1) and not 6 (2) (ii) of IAS Cadre Rules!
Mr Sinha got his emoluments increased after the decision of the Establishment Officer with retrospective effect to Dec 2006 and earned over 10.5 crores.
The purpose of appointing a corrupt and manipulative person to the sensitive post of SEBI chairman was to settle issues of thousands of crores in favour of the concerned companied which had lobbied with her.
The allegation of Ms Paul acting on behalf of the corrupt corporate is borne by the fact that Dr Abraham as a WTM had leveled allegation in a letter dated 1/6/2011 written to the Prime Minister that Mr Sinha tried to influence him on four cases. One of the case related to securities fraud of Reliance group, and others related to Tayals of Bank of Rajasthan, Sahara, and MCX.. While trying to influence him Mr Sinha had stated that these were “engaging the attention of Union Minister for Finance, or Mrs Omita Paul, Advisor to the Finance Minister,”.
The denial of extension to the then Chairman and members of SEBI by Mrs Paul, the fact the extension was stopped when SEBI recommended action against the Reliance group to the Finance Ministry on a eight year complaint by Mr Gurumurthy involving over 25,000 crores of benefit to the promoters, the extraordinary interest taken by Ms Paul in having a corrupt person like Mr Sinha appointed as SEBI chairman by suppressing his illegal salary from the selection committee and the Appointment Committee, and the subsequent action of Mr Sinha all show that Ms Paul was involved in harming national interest by promoting corporate interest of the respective companies.
Sahara was a company taking deposits from small un-bankable people. From 2008 onwards during the tenure of Mr Mukherjee it violated the deposit norms under section 58 A of Companies which allowed to collect unsecured deposits from debentures for 10% of its own fund. By that it could have collected only Rs 230 crores but went on to collect over Rs 20,000 crores. Almost the entire money collected was siphoned out and virtually there were negligible assets in the company in whose name deposits were taken so that the group could not be compelled to refund the amount. It was the largest ponzi scheme involving 2 crore poor people.
Dr Abraham had passed orders in the company which was contested by Sahara in the High Court. But by a freak chance the matter came before him for adjudication because the CJI referred the matter to SEBI. He adjudicated the matter at the fag end of the tenure (23/6/11) directing the group to refund the entire money to the investors. His order was upheld by the Tribunal and is likely to be upheld by the Supreme Court also. The order of Dr Abraham is proof of his competency and honesty, while the shenanigans of Mr Sinha at UTI AMC is proof of his cleverness and manipulative skills.
The second case that interested Ms Paul was the securities fraud of 513 crores of Reliance group (Mukesh Ambani group). Reliance Petroleum shares were short sold for Rs 290 and later covered when the shares were sold in the cash segment and the prices fell. The reliance group made 513 crores in five days. The securities fraud occurred in Nov 2007
The penalty is three times and the total amount involved is 2000 crores.
Reliance tried to settle the matter by paying a fine of only Rs two crores and then eight crores through consent order. It was not even willing to pay back the fraud amount of Rs 513 crores. This was not acceptable to the then officers of SEBI..
Mr Sinha has changed the circular on the consent order (25/5/2012) in a manner to favour Reliance group and continue the settlement of the criminal offence through a consent order. This is in sharp contrast with the case of Rajat Gupta whose offence was much less but then he did not a Omita Paul or U K Sinha to bail him out.
The third case related to the Tayals of Bank of Rajasthan in whose favour the outgoing member Prashant Saran passed a favourable order so that he could be re appointed. That the order only showed that the allegation of Dr Abraham were true. Similar conclusion were made by the media
Kindly refer links in Financial Express and Mint on Mr Saran’s order
The fourth case related to MCX which wanted to open a parallel stock exchange. The Ministry ensured that Dr Bimal Jalan Committee report is taken up by SEBI after Sinha became the chairman so that the portion relating on listing of the stock exchange company is rejected. This would help in giving market value to the MCX license. Further the terms of opening the exchange too has been diluted.
Other related scandals
On the slot vacated by Sinha at UTI AMC, Ms Paul wanted her brother to be appointed and though the four financial institution under her were agreeable the foreign shareholder was not. As a result the post of the CMD remained vacant for fifteen months because Ms Paul wanted to have her brother appointed. Great harm to public interest was done because UTI has around 60,000 crores invested in the financial market and large part of the money comes from government sources.
It was only when the candidature of the Mr Mukherjee was considered for the post of President of India seriously, the brother of Ms Paul withdrew from the race of the post of CMD of UTI AMC The advertisement released subsequently for the post thereafter shows that neither Ms Paul’s brother nor Mr Sinha had the qualification because it states that the person should be a seasoned financial service professional with minimum 20 years experience. They are neither financial service professional nor have a days experience. In fact the advertisement released, for the first time honours the commitment given to the government to the JPC II on securities scam that a professional would be appointed through a advertisement.
Mr Sinha had increased his emolument through a rubber stamp Board on the grounds of industry parity conveniently forgetting that he was appointed to an executive post and industry parity is given to non executive posts like pilots etc. His deputation was covered under Rule 6(1) of the cadre rules and the maximum he could draw was Rs 1.25 lacs per month. It was for this reason he appealed to the High Court against the order of the Information Commission that UTI AMC is covered under the RTI Act. Both Ms Sinha and Ms Paul wanted the illegal emoluments to be a secret for their respective reasons.
The other act of nepotism involved Ms Omita Paul’s husband who was favoured by an unprecedented amendment in the IT Act. The following exemption granted in the year 2011 was notified for being applied retrospectively from the year 2007-08 to cover the entire tenure of Mr Paul in the UPSC Section 10 (45) of the Income Tax Act was introduced in 2011 to state: (45) any allowance or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission. Retrospective amendment to undo a judgment or wrong has been known but never to pass on a benefit like the one above. The amendment was sought to be justified on the basis of sixth pay commission report but there no such recommendation in the report. The fact is that Ms Paul out of sheer vindictiveness used her influence to initiate disciplinary proceedings of major penalty against an honest officer like Mr Abraham who exposed her corruption and refused to compromise. His order against Sahara is in sharp contrast to the manipulations of Ms Paul and Sinha.
There is sufficient material to charge her for offences committed by her under PCA and IPC.
Answers are needed on whether all these actions of Ms Paul narrated was within the knowledge of Mr Mukherjee? Some of them were also covered in the press! He gave official approval whenever the same was required. If so then what did he do restrain her and protect the public interest? Or was he helpless to act?
Ms Paul is the responsibility as the latest extension given to her on 15/6/2012 states that her tenure “coterminous with the tenure of Shri Pranab Mukherjee as Finance Minister”.
Her next assignment is the post of Secretary to the President of India!