PAC to review regulatory bodies’ performance; SEBI chairperson likely to be summoned amid conflict of interest allegations

New Delhi September 6 2024 : Amid growing political controversy, the Parliament’s Public Accounts Committee (PAC) has decided to review the performance of regulatory bodies established by Acts of Parliament, including the Securities and Exchange Board of India (SEBI). This development comes in the wake of conflict of interest allegations against SEBI Chairperson Madhabi Puri Buch, with sources indicating that she may be summoned by the PAC. The next PAC meeting is scheduled for September 10, but Buch is unlikely to be called during that session. However, additional sessions later in the month are expected to address the SEBI matter, with officials from the finance and corporate affairs ministries potentially being summoned as well.

The allegations against Buch have emerged primarily in connection with SEBI’s investigation into the Hindenburg Research report, which raised concerns about the Adani Group. Additionally, the Congress party has questioned Buch over payments she allegedly received from ICICI Bank, her former employer, even after she became a whole-time member of SEBI. The Congress has called for an independent investigation, asserting that these payments violate office of profit rules and undermine the integrity of India’s financial markets, potentially affecting foreign investor confidence. Compounding the controversy, SEBI employees have lodged complaints with the finance ministry, accusing the regulator’s leadership of fostering a “toxic” work environment. They allege instances of public humiliation, shouting, and scolding during meetings. In response, SEBI has refuted these claims, arguing that a small group of employees have orchestrated a strategy to shift the narrative regarding work culture to gain bargaining power and secure additional benefits. The regulator dismissed the allegations of public humiliation as “misplaced.”

The PAC, chaired by Congress leader KC Venugopal, has a broader agenda of reviewing regulatory bodies’ performance, banking and insurance sector reforms, and the implementation of centrally sponsored welfare schemes. The committee is tasked with auditing the government’s revenue and expenditure, and its current agenda includes 161 subjects. Among these is the audit of fees, tariffs, and user charges levied at public infrastructure, such as airports.