The Budget session of Parliament has been disrupted for four days running owing to allegations of stock manipulation and accounting fraud by Adani group companies leading to demand by Opposition parties for a joint parliamentary committee (JPC) to go into the issue. There is nothing wrong in asking for the probe. After all, investors lost huge amounts of money in a free fall of share prices in the wake of the American firm Hindenburg Research’s report against Adani companies.
In April 2001, Parliament set up a JPC to probe into what is known as the Ketan Parekh share market scam headed by a senior BJP leader Lt Gen Prakash Mani Tripathi (rtd) . The committee subsequently recommended sweeping changes in stock market regulations in its report submitted in December 2002. Earlier in August 1992, Parliament agreed to set up a JPC on the Harshad Mehta stock market scandal which caused monetary losses to small investors to the tune of crores of rupees.
Since serious questions have been raised against companies owned by Gautam Adani, considered close to the high and mighty in the BJP government, it stands to reason that proper investigations be done to allay suspicion in the public mind. This will do well to both the Government of the day and the investing public as also to the systemic fault, if any, in corporate governance.
True, Hindenburg Research, a short seller US firm, enjoys no great reputation having been under the watch of the US regulatory authorities. But the Adani group too is not known to be above board either, judging by its past records. The Adani group, in any case, has not initiated any legal action against the American firm so far much as it threatened to do so. The SBI and LIC which have a substantial stake in the Adani group firms, came out with clarifications that their money is safe. Even so, there is lurking fear in the investing community that it might lose money further. It is all the more necessary, therefore, that Government action is initiated in order to safeguard public interest. There are only two ways of doing so: appoint a JPC as is being demanded by the Opposition or set up a Supreme Court-monitored probe in line with suggestions by some members of Parliament.
Indeed, it is in the Government’s own interest to get out of the mud ahead of assembly elections in nine states this year followed by parliamentary elections next year. And the sooner the better. Remember JPC on Bofors scandal which carried on and on giving a long rope to the Opposition, ultimately grievously hurting the then Rajiv Gandhi government.
Ensuring clean corporate governance has been a challenge for every government. Modi government is no exception, judging by the current imbroglio. Every probe has furthered the cause of corporate governance, including the JPCs on Ketan Parekh and Harshad Mehta. Giving another JPC on Adani's allegations may not be off the mark, if only for further strengthening the corporate governance structure.