Sebi under CBI radar as ex-CVO examined in Bank of Rajasthan case

A whole-time member of the Securities and Exchange Board of India (Sebi) and a former chief vigilance officer (CVO) of the market watchdog have been quizzed by the Central Bureau of Investigation (CBI) for allegedly diluting the penalty imposed on promoters of erstwhile Bank of Rajasthan (BoR) for violation of stock market norms. BoR was acquired by ICICI Bank in 2010.

CBI sources said that wholetime member Prashant Saran-who had been chief general manager of the Reserve Bank of India-and former CVO R.K. Padmanabhan-a 1991-batch IPS officer from the Maharashtra cadre-have been examined for their alleged role in the purported dilution of penalty from Rs 2,000 crore to Rs 30 crore levied on BoR promoters.

Despite then-CBI director Ranjit Sinha's clear direction to register a preliminary enquiry (PE) in the matter, it was held back at the anti-corruption branch office, Mumbai, of the agency for over a week. Later, the CBI headquarters handed over the matter to its Economic Offences Wing in Mumbai, which started the inquiry.

Last October, the CBI registered a PE into the alleged role of Sebi officials in the alleged weakening of the case against promoters of BoR, which was being probed by the regulator, and other suspected irregularities in the investigation.

Padmanabhan was one of the officers who was part of this investigation while Saran had adjudi-cated the matter.

According to CBI sources, both the officers, who were questioned recently, had claimed innocence saying they had gone by the laid-down rules to determine the amount to be paid as penalty. Saran is understood to have told the CBI that he had adjudicated the matter based on material placed before him and did not favour anyone.

A major controversy had arisen in Sebi over the appointment process adopted for the key post of CVO and executive director (investigation). Padmanabhan, who was both CVO and ED (investigation) had been approved for the post again despite three complaints lodged against him with the Central Vigilance Commission (CVC). Mail Today accessed an official reply of the CVC which states that "three complaints were received against Sri R.K. Padmanabhan during the period April 1, 2011, to April 1, 2014."

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