If justice delayed means justice denied then India is a country
of an acute justice deficit. Especially in the case of financial frauds it is a
land of comprehensive absenteeism of justice. The fast and quick trial and
conviction of Rajat Gupta, an erstwhile Managing Director of management
consultancy McKinsey & Company in insider trading has shown the robust and
speedy law enforcement process of US Govt. One cannot imagine this to happen in
India thanks to an abysmally procrastinating judicial system and archaic
legislative setup.
The trial of Rajat Gupta began on 21st May 2012 and less
than a month on 15th Jun 2012, he was found guilty of conspiracy and three
counts of insider trading. Just four years and one month elapsed between the
telephonic conversation that took place between Mr Gupta and Mr Rajaratnam and
his sentencing on Wednesday. Who can forget Harshad Mehta and what has happened
to Ketan Parekh or for that matter Bofors case which took 25 years for its
denouement. These trials don’t even deserve any comparison with that of Rajat
Gupta yet latter is seeing hard-time just because he wasn’t lucky enough to get
trialed in India.
Insider trading of stocks is notoriously hard to prove anywhere
in world. According to the SEBI’s annual report, it took up investigations of
24 insider trading cases and completed investigations in 21 in the year
2011-12. Insider trading cases accounted for 15 per cent of the total number of
cases. Yet, not a single example can be cited when any person involved in
insider trading got convicted in India. SEBI has only few instances of success
when Reliance Infrastructure and Reliance Natural Resources were fined for
breaching securities laws. It has also fined a former independent director of
Ranbaxy Laboratories, V K Kaul and the chairman of Jaiprakash Associates (JAL),
Jaypee Group’s engineering and construction arm Manoj Kumar for the same but
these efforts of market regulator go in vain as most of them simply appeal
against their charges in the tribunals or courts and the case then either drags
for years or goes against the SEBI itself. For instance, recently, the order
against Gaur was set aside by the Securities Appellate tribunal (SAT) for want
of evidence.
It is quite hard to crack the financial fraud being done in
financial institutions and even more difficult is to defend it in the courts of
law. SEBI is asking for more powers to monitor economical frauds. It is worth
noting that the charges against Mr. Rajat Gupta would not have been proved in
the absence of wiretaps available. It is against this background that SEBI has
been asking for powers to have access to call records of suspected persons
involved in fraud and also seeks the demand of special courts for special
trials but it doesn’t seem to be happening anytime soon.
Gurcharan Das writes in India Grows At Night–A
Liberal Case for a Strong State that “500 out of the 3,500 central
laws are obsolete and needed to be scrapped, and half of the 30,000 state laws
as well.” This is why India is sickened with its poor-governance
and often humored due to the weak enforcement of laws. India needs a complete
legal overhaul in terms of fresh laws and swift jurisprudence. It is dire must
to maintain the rule of law in the nation and to mend its image of soft estate
for the crooks.
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