Rule prohibiting investment by opaque funds removed by SEBI on 'weak grounds', claims Congress

The Congress on Tuesday alleged that a rule prohibiting investment by opaque funds was done away with by SEBI on "weak grounds" and said the market regulator cannot run with the hares by diluting reporting requirements and hunt with the hounds pretending to identify beneficial ownership in opaque tax havens.

The Opposition party's assertion came after a media report claimed that the Supreme Court-appointed committee scrutinised SEBI's dropping of a key regulatory requirement for foreign portfolio investments (FPIs) months before it developed suspicions on Adani group shareholding.

In a statement, Congress general secretary in-charge communications Jairam Ramesh said it is now clear that, far from a clean chit, the Supreme Court expert committee on the "Modani mega scam" has unveiled how Securities and Exchange Board of India's (SEBI) investigation of suspicious Adani transactions have been blocked or reached an impasse, which is why the market regulator's report deadline was extended to August 14.

The expert committee had revealed that this was partly of SEBI's own making, after the regulator did away with the requirement on identifying the ultimate beneficial owner of foreign funds and deleted provisions on "opaque structures", Ramesh said.

"This despite PM (Narendra) Modi's frequent and evidently empty rhetoric against black money and offshore tax havens," he added.

Posting his statement, Ramesh tweeted, "Here is my statement on the latest revelation this morning on the Modani MegaScam which gets curiouser and curiouser by the day as new information trickles out."

"A report today in a leading economic daily now provides details as to how the rule prohibiting investment by opaque funds, i.e. Regulation 32(1)(f) of SEBI (FPI) Regulations, was done away with on weak grounds. Can SEBI explain the pressures placed on it to move in this unexpected direction?" he said in his statement.

"How is improving the 'Ease of Living' of those suspected of money-laundering and round-tripping consistent with promises of 'na khaoonga, na khane doonga (will not indulge in corruption nor let others indulge in it)'," he said.

"It is therefore hardly surprising that SEBI has been unable to find the true beneficiaries of 42 companies based in offshore tax havens that have invested in Adani companies. It cannot run with the hares by diluting reporting requirements and hunt with the hounds pretending to identify beneficial ownership in opaque tax havens like the Cayman Islands, Malta, British Virgin Islands and Bermuda," the Rajya Sabha member said.

He claimed that contrary to the finding of the expert committee, this bears a strong resemblance to regulatory failure.

"We earnestly hope that the 14th August SEBI report throws more light on the issue rather than covering it up," Ramesh said.

The Congress has been demanding a Joint Parliamentary Committee (JPC) probe into the allegations against the Adani Group.

The Adani Group has dismissed the allegations as baseless.