CBI has the autonomy to probe, not to malign people: CB Bhave, Former SEBI Chairman

In March, when the CBI registered a preliminary inquiry, or PE, against former Sebi chairman CB Bhave and his then colleague KM Abraham for what it termed was their role in approving a licence to the currency trading segment of MCX-SX, they found support from officials and ministers, too. Now, almost six months later, the CBI has dropped the proceedings and has recommended a departmental inquiry against them by the finance ministry. Bhave, who slammed the approach of the CBI chief then, now says the agency does not have the autonomy to malign people and that it is outrageous that it has now named three serving Sebi officials and one former senior official, defaming them and leaving them defenceless. Excerpts from an interview with ET's Shaji Vikraman:

The CBI now says it has dropped proceedings against you and KM Abraham over your role in granting a licence to MCX-SX stock exchange as it does not amount to criminality. What do you have to say on the decision?

It is no surprise. Their case had no basis. The CBI was trying to use Sec 13 (1) (d) (iii) of the Prevention of Corruption Act. That subsection clearly lays down that if the action of the public servant is in the public interest, it cannot constitute an act of criminal misconduct. There was no way that anyone could have argued that creating competition for NSE in the currency derivatives segment was not in public interest.

Many find it strange that the CBI has recommended departmental action by the finance ministry against both of you when, basically, the agency's mandate is to establish criminality. Is it an attempt to dodge offering an apology, which you sought if they were unable to establish anything?

There is a deeper issue here. The CBI seems to have become an agency for maligning public servants. It first announces the PE with our names without a proper understanding of issues, creating an impression that we did something criminal. Having failed to establish any wrongdoing under the Prevention of Corruption Act, it talks of departmental action. It wants to continue the impression that something was wrong. Leave alone public servants, no citizen of a self-governing nation should be casually charged of a criminal offence by the state like this.

The CBI needs to earn its laurels through thorough investigation and successful prosecution and not by maligning people. While the CBI has autonomy in investigation, it does not have autonomy to malign people. I hope the government takes notice of the way this case has been handled and takes corrective measures.

Earlier this year, you had told us that the buck stopped at your desk during your tenure and that any probe by the CBI should only be against you alone. What do you now make of the CBI's decision to file an FIR against a former ED and three other serving officials for giving approval to the exchange?

This is again an announcement that I do not understand. We do not know what the FIR actually is about. There are some garbled versions out in the media. But four officers have been named and stand condemned in the public eye without an ability to defend themselves, for they do not know what is alleged against them. It is outrageous that their names are made public, leaving them defamed and defenceless. During my conversation with the CBI, there was not even an informal question about the conduct of these officers.

The CBI's FIR against three serving Sebi officials and Jignesh Shah, the promoter of FTIL, says the promoters of the bourse had entered into a buyback arrangement with a nationalised bank, in violation of relevant rules, and, in connivance with Sebi officials, suppressed this material fact while applying for an extension of recognition of MCX-SX to conduct trade in currency derivatives in 2009. What is your understanding of this?

It is difficult to comment on the substance unless we know what the FIR actually says. Some people told me that the FIR is not a public document. I do not know how this works. The FIR is not a public document but the names of the officers can be officially released to the public!

FTIL itself says it would make a representation to the CBI highlighting what it says are the correct facts on the buyback arrangement, which was not found illegal by the Bombay HC.

The matter went to the Supreme Court after that. The Supreme Court asked Sebi to decide the issue without being bound by the findings of the Bombay High Court. I am not aware whether Sebi followed the Supreme Court order and decided the issue of whether buyback arrangements are legal or not. I have not seen anything in the public domain.

The CBI's own crime manual says even if the matter is referred for departmental proceedings, they cannot be instituted against retired officials if the case in question is more than four years old and without presidential sanction. How do you view their action against this backdrop?

There is nothing wrong with what we did. So I have to reluctantly conclude ?CBI was unable to stick any mud on us and is now raising some dust to confuse everyone?. I will watch with great interest what the (finance) ministry does about this.

Judging by the criminality angle the CBI sees in granting extension for a currency futures exchange, isn?t the approval to NSEL seven years ago exempting the exchange from regulatory oversight for one-day contracts a fit case for a probe and action?

This has been a problem all along. The scam occurred in NSEL in the commodities space and the investigative energy and resources are being wasted on currency derivatives. Again, I do not believe that investigative autonomy has been granted for leaving the obvious areas unattended and spending energy on some other areas to create an appearance of investigative zeal.

Should the entire blame be on the CBI?

The CBI is the premier investigating arm of the government. I am sure the whole agency cannot be like this. But I do not know which individuals are bringing the CBI into disrepute like this. I have to talk in general terms.