Former NSE CEO Chitra Ramkrishna arrested by CBI in co-location scam

The Central Bureau of Investigation late Sunday evening arrested Chitra Ramkrishna, former CEO of National Stock Exchange (NSE) in connection with its ongoing probe in the NSE co-location scandal. She was arrested in Delhi and will be produced before a local Court on Monday. The agency will seek her custodial interrogation from a local Court.

The former NSE chief was denied anticipatory bail by a special CBI Court on Saturday. Refusing to grant her protection from arrest the CBI court had observed that the charges against Ramkrishna are “grave and serious” in nature.

The Court had observed that the former NSE CEO had “introduced a non-existing person to mislead the investigative agency which may also prima facie show her connivance in the matter”. The agency will confront Ramkrishna with her ex advisor Anand Subramanian who is already in the custody of CBI, said people in the know.

A February 11 order by the Sebi had alleged the unauthorised exchange of emails containing confidential information between Ramkrishna and an unidentified individual referred to as a yogi. The NSE is India’s biggest exchange.

“It cannot be said prima facie at this stage that the role” of Ramkrishna “is not under scanner,” judge Sanjeev Aggarwal had said Saturday while dismissing the plea filed by Ramkrishna. “The very appointment of Anand Subramanian without following due process at very exorbitant salary, prima facie shows that all of them may have been acting in tandem with each other in carrying out or in furtherance of the objectives of the co-location scam.”

The NSE co-location case stems from allegations of unfair, preferential access to certain entities in 2012-14. Interest in the case revived after the Sebi order of February 11 that contained details of email exchanges between Ramkrishna and the so-called mystic, many of which contained confidential information and urged the repeated advancement of Subramanian, despite his apparent lack of qualifications. Several former officials have been questioned.

The court took the CBI and the market regulator to task over the way their inquiries have been conducted. “CBI is most lackadaisical to say the least as no action seems to have been taken against main beneficiaries of the present co-location scam and others for almost four full years, who seem to be enjoying merrily at the expense of common citizenry for the reasons best known” to the agency, it said.

“Further even Sebi despite being capital market watchdog has been too kind and gentle… All this while the Sebi has looked away with regard to launching criminal proceedings.”

The CBI had opposed Ramkrishna’s plea and told the court that it needs the custodial interrogation of Ramkrishna to “dig out the truth” and wants to “confront” her with Subramanian.

The agency informed the court that it searched Ramkrishna’s home on February 24, seizing various articles, including her mobile phone and laptop. Ramkrishna was questioned on February 18, 19 and 22. A senior forensic psychologist who was present said she was evasive in her responses, according to the CBI.

Senior advocate Dayan Krishnan, appearing on behalf of Ramkrishna, argued that neither was she named nor was any role attributed to her in the first information report (FIR) registered by the CBI in May 2018 in the case. It was further argued that she was not called for questioning in the case even once in the past four years. Ramkrishna said private conversations had no bearing on her functioning and that she is taking “appropriate legal recourse against the said order of Sebi”.

She further said that “undue public pressure is being created through media on the investigating agencies” in view of the order passed by Sebi. On the allegedly exorbitant salary paid to Subramanian, Ramkrishna said it was a “corporate governance” issue and had nothing to do with the NSE co-location case being investigated by the CBI. She said she was “forced” to move an anticipatory bail after she learnt about Subramanian’s arrest.

The court found it hard to believe that NSE officials were in the dark about what was going on.

“Prima facie this kind of co-location swindle could not have been possible without the knowledge and active connivance of all the functional heads of the NSE at the relevant time, this period can be considered as dark period in the history of NSE,” the court said. “Being in pole position in the NSE earlier, there are strong chances that she may influence and tamper with the evidence.”

Observing that there “are many facets of the investigations which have to be excavated by the investigating agency after removing the dust of time over them,” the court said, “the magnitude of the present case may be huge, as due to this financial skulduggery huge loss may have been caused to adherent stockbrokers, institutional investors, foreign institutional investors and honest investors, whose faith in this premier financial institution i.e. NSE may have been severely shaken and dented.”

Given NSE’s critical role in India’s financial system, the court said a different approach is needed.