Reliance Power complainants to appeal against SEBI Order
The shareholders of Reliance Energy Limited who petitioned High Court and SEBI and several other agencies against the proposed Reliance Power Limited have decided to go against the SEBI order and file petition challenging the SEBI order.
Reliance Power Limited IPO has been surrounded by allegations of massive fraud by promoters of Reliance Energy Limited since the day the Draft Red Herring Prospectus was filed with the Securities and Exchange Board of India.
Given the clout of the large corporate houses which not only own media houses but also own large mutual funds, the efforts of the small investors to protect the essence of the capital market is important from the perspective of long term survival of the Indian capital market..
As per the market experts, the minority shareholder rights is being given a body blow by SEBI in their order dated December 27,2007.
The group of public minded investors believe that SEBI Order issued on December 27,2007 does not take in to account the facts presented in front of SEBI and instead helps perpetrate the fraud that is taking place.
Curiously, timing of the order and the hurry with which SEBI cleared the prospectus within 1 day of the order without even serving the order to petitioners is also troubling many SEBI watchers.
Incidentally, the order clearing the way for the controversial IPO was put on the SEBI site on December 27,2007, the eve of the 75th birthday of the legendary Dhirubhai Ambani who is the father of the alleged perpetrator of the alleged fraud. More curiously, the approval for IPO fell on the exact date December 28,2007 which was 75 th birthday.
Many market experts see this as a way of SEBI and Ministry of Finance acting as hand maiden of large capitalist interests to enrich the fat cats at the expense of small investors, LIC, GIC and other Government Institutions.
In fact the allegation are of such serious nature and the proofs of contravention of law as well as the intent to fraud are so overwhelming that LIC Chief Vigilance officer has been given orders by the Central Vigilance Commission, Government of India to conduct an inquiry in to the role of the LIC Nominee Director on the Board of Reliance Energy and the entire fraud through which LIC will loose more than Rs. 10,000 crores which will go directly to enrich the coffers of Mr. Anil Ambani.
As per their petition submitted in the high court by Rajkot Saher Jilla Grahak Suraksha Mandal, which is a SEBI approved investor association, the total amount of fraud that will make Mr. Anil Ambani personally richer at the cost of small investors will be more than Rs.50,000 crores. In that sense, if proved correct, the New IPO Scam will be much bigger than all other scams combined in the Indian stock market history including Harshad Mehta, Ketan Parekh and all other scams.
It remains to be seen whether the higher authorities will uphold the investors' rights or not when they approach these authorities. However, the investors are hopeful based on the experience of SEBI orders getting squashed by higher authorities on technical and legal grounds in the past on several occasions.
When asked, why SEBI orders are not able to meet the highest standards of legal scrutiny, a supreme court advocate said that although the SEBI has been a quasi judicial authority, the people passing the orders are typically retired bureaucrats which makes them especially prone to commit several errors which become untenable when passed through the strict legal framework of higher level authorities.
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