Column : Keeping Sebi out of Satyam

A full two weeks after the country's biggest corporate fraud was revealed by the perpetrator himself, it's astonishing that the stock market regulator is still in the dark.

Sebi had ordered an investigation on the very day Satyam founder and ex-chairman B Ramalinga Raju made his infamous confessions and within two days, a team of senior officials had reached Hyderabad. Though they were told that they would get to meet Raju in the afternoon, Raju's lawyer turned up instead, seeking a day's deferment of the meeting, ostensibly citing Raju's stress levels.

The very next day, a Saturday, instead of meeting Sebi officials as promised, Raju and his brother surrendered before Andhra Pradesh's director general of police. The metropolitan magistrate who handled the case opted to send the Brothers Grimm to judicial custody instead of police custody, which was only allowed on January 18. This meant that neither the police nor Sebi could ask Raju a single question about his bunglings without the court's permission.

On January 21, after a Sebi meeting, its chairman CB Bhave, whose impeccable credentials make him a highly respected figure in financial markets, seemed hapless and helpless when he lamented that Sebi has still not been able to question Raju or his chief financial fraud officer Srinivas Vadlamani.

So, the state CID has the Rajus and their CFO in their custody now, and the Sebi team has only managed to question the auditors and the firm's internal finance department staffers. But that's not enough to unearth a fraud of such scale. Clearly, the state is in full control, not the market regulator, whose preamble says its primary role is to 'protect the interests of investors in securities and to promote the development of, and to regulate the securities market'. There may be an alphabet soup of investigators now probing Satyam's accounting cuisines, but few would be as up to speed with contemporary corporate realities as Sebi. Is an agency probing too deep into the mess or capable of coming up with answers too fast politically inconvenient? Is a three-month probe by the Serious Fraud Investigation Office more suited to powers that be?