Curious developments
The Stock Holding Corporation of India’s (SHCIL) e-stamping contract is now attracting the attention of Government investigation agencies. After the massive fake stamp scam (Telgi scam) the government decided to launch electronic stamping of revenue documents and SHCIL bagged the mandate to become the Central Record Keeping Agency. IFCI, which has a 16.9 per cent stake in SHCIL, was a project consultant for awarding the e-stamping contract. The technology will come from Crimsonlogic Global of Singapore. Curiously, the Ministry of Commerce on 7 November 2006 permitted SHCIL to make the technology payment to Unitec Value Solutions Ptd Ltd, instead of paying Crimson Logic directly.
The presence of this intermediary is attracting the attention of investigation agencies, especially because Unitec Value Solutions is linked to SHCIL Services Ltd., a subsidiary of SHCIL. Incidentally, the agencies are also looking at SHCIL’s holding in this subsdiary, since over 76 per cent of the shareholding has reportedly passed into private hands. IFCI has also raised questions about this sale. SHCIL is a large Custodian and epository Participant and owned by several government institutions; yet, it was badly indicted in the Ketan Parekh scam.
Even then, its e-stamping operation will be largely unregulated; both its regulators — Sebi and NSDL — told this paper that they will not look into these operations. So who will?
Information void
Caveat Emptor or Investor Beware is the guiding principle for capital market investment. Yet, very little information is actually available to investors in the public domain. Forget about investors, even the media finds it tough to get basic information such as shareholding pattern as we found in the SHCIL case. Even less is known about SHCIL Services, which was allowed to start brokerage operations in 2006. The Bombay Stock Exchange website lists SHCIL Services Ltd. as a firm belonging to SHCIL; but no information about shareholding is available either at the bourse website, the Registrar of Companies or on the Sebi website. This is clearly relevant information for shareholders, especially if 76 per cent of the stake has been sold off to private parties. It is clearly a regulatory anomaly that the capital market watchdog has exacting standards of reporting and disclosure for listed companies, but does not require equal disclosure from market intermediaries under its direct supervision.
... contd.
Sucheta Dalal
