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CAG pulls up Sebi for wasting money on non-existent body

CAG pulls up Sebi for wasting money on non-existent body
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First Published: Sun, Jun 10 2007. 02 19 PM IST
Updated: Sun, Jun 10 2007. 02 19 PM IST
New Delhi: Comptroller and Auditor General (CAG) has pulled up market regulator Sebi for incurring expenditure of Rs43.73 lakh on salaries and other allowances of staff, including CEO of the Central Listing Authority (CLA) in 2003-05, even when the body was not formally set up.
The Comptroller and Auditor General in its report termed the appointment of CEO and other supporting staff for CLA as injudicious as the body was not established though such an announcement was made by Sebi.
In April 2003, Sebi had announced setting up of CLA, which was to receive and process applications for issue and listing of securities on the stock exchanges.
However, in May that year Sebi clarified that till CLA was established, all listing applications should be made to stock exchanges directly.
CAG noted that Sebi had not notified the date of establishment of CLA, but appointed a Chief Executive Officer (CEO) for it in January 2004 for a period of three years at a monthly remuneration of Rs1.20 lakh. The market regulator had also deputed its five officers as supporting staff for CLA with effect from 3 May 2004.
Since the date of establishment of CLA was not been notified, it remained non-operational and CEO and other supporting staff could not perform any official duty.
“Consequently, expenditure of Rs 43.73 lakh incurred on their salaries, travel and office expenses during 2003-05 was wasteful,” CAG said.
CAG also observed that during the internal deliberations of SEBI in March 2004, its Legal Affairs Department had raised certain doubts about operational independence and legal status of CLA.
The auditor also noticed that Sebi Chief M Damodaran had observed in March 2006 that in view of the proposed opening of 23 regional exchanges, CLA may no longer be required.
In response to the audit observation, the Finance Ministry confirmed in October 2006 that CLA had not performed any function as its date of establishment had not been notified.
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First Published: Sun, Jun 10 2007. 02 19 PM IST