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Payment crisis at Lyons Range -- Why didn't CSE detect bug in CMC software for years?: JPC

Jayanta Mallick

KOLKATA, July 10

THE Joint Parliamentary Committee (JPC) investigating the stock market scam is of the view that the bug in the margin software provided by CMC Ltd was responsible to an extent for the crisis on the Calcutta Stock Exchange (CSE) in March.

Mr P.M. Tripathi, JPC Chairman, however, wondered after the `study visit' to the CSE as to why the exchange officials failed to detect the bug for years. Mr Tripathi said both CMC and CSE officials had been asked to put forward their versions on the subj ect. ``They will be called later for interrogation and cross-examination,'' he said.

During the three-hour-long session, the JPC heard the former broker-directors of CSE, key officials of the bourse, Indusind Bank, CMC Ltd, representatives of brokers and investors. Members of the panel have gathered a ``fair knowledge'' about the functio ning and weaknesses of CSE, Mr Tripathi felt.

On the issue of informing the exchange regarding bouncing of cheques, the version of Indusind Bank officials was heard today. ``Now we have both the versions -- one of the CSE and the other of the bank. They have been asked to provide evidence to substan tiate their contradictory claims.''

On the subject of the unofficial and parallel badla market which was centred in Kolkata, the JPC was attempting to figure out the size and extent of it. ``It is an open secret that the grey market existed and the key players in the official and the unoff icial markets were the same.''

The JPC will closely probe the issues involved, including the possibility of connivance and complicity of exchange officials, previous broker-directors and the grey-market racketeers.

He indicated that the stages of interrogation, cross-examination, fixing of responsibility and recommendation of remedial measures would come later. ``It is reasonably clear that there was a lack of surveillance and monitoring.''

Officials of the key departments such as surveillance, margins and market operations, as also the Executive Director and previous CSE committee members, would be called for deposition.

He felt the ED of CSE and the Securities Exchange Board of India should have kept their ``eyes and ears open.'' Mr Dinesh Kumar Singhania, who was on the previous governing committee of CSE as a Director and was declared a defaulter, was conspicuous by h is absence at the hearing.

Mr Tripathi told Business Line that, so far, the responses to the JPC queries to all agencies concerned, including SEBI, RBI, Finance Ministry and the exchanges, was to the extent of about 80 per cent. ``We expect to receive the remaining responses short ly.'' The replies would form a part of the basic ``inputs'' for investigation, Mr Tripathi explained.

Meanwhile, three of the four principal CSE defaulters have obtained anticipatory bail against possible arrest in connection with criminal cases filed by the exchange for bouncing of cheques presented for meeting the margin requirement in March. According to Mr Tapas Dutta, ED of CSE, the next hearing for the case has been fixed by the City Civil Court on August 8.