The erstwhile Disinvestment Commission had been apprehensive about a Reliance monopoly in the petrochemical industry, if it were to acquire the Indian Petrochemical Corporation Ltd (IPCL) through the disinvestment process. Its recommendation to keep Reliance out of the bidding was ignored, but its fears seem to be coming true. Under the pretext of a sharp rise in international petrochemical prices, Reliance has hiked its rates for polymers, polypropylenes, PVC and polyethylene by as much as 25 to 35 per cent. In some cases, prices have risen three to four times in a month. Reliance now controls nearly 75 per cent of the petrochemical market, with loss-making Haldia Petrochemicals as its only major competitor. When the monopoly issue was discussed before the IPCL disinvestment, Reliance had argued that a domestic monopoly was meaningless in a global market facing a glut in petrochemical products. But the import duty on key petrochemicals products that Reliance manufactures remains at a high 30 per cent—and is among the highest in the world. Is this because government reacts slowly to global price trends or because it is encouraged not to act? With the Budget around the corner, finance ministry mandarins may like to act on Reliance’s argument (prior to the IPCL acquisition) that government could always lower import tariffs on petrochemicals to zero.
The arrest of two journalists (one was an ex-journalist) from some pink newspapers last week, has triggered off serious introspection in the media about on how to control corruption. The two journalists were caught accepting a Rs 7-lakh pay off, which was part of a blackmail deal to suppress damaging information about an investment company. Interestingly, the duo are among three officials who were asked to leave the National Stock Exchange (NSE) several years ago, following an investigation into the leakage of sensitive market information to Ketan Parekh. All three made a career switch and became journalists. The same economic daily that employed one of the arrested journalists had earlier shown the door to two senior journalists after the scam of 2000-01 when investigations by the Sebi revealed that they received a significant preferential allotment of Aftek Infosys shares. The allotment was allegedly at the behest of Ketan Parekh. These unsavoury media developments have also spurred Sebi into action. Our sources say that Sebi plans to set up a committee comprising the media, the corporate sector and capital market intermediaries to work out a code of conduct for the business press (including corporate executives who regularly write columns) and get a commitment from media houses to ensure compliance.
A couple of days ago, this newspaper reported that parents in Patna had wrestled with the police to help their children cheat in their exams. Mumbai is only slightly different. An elite South Mumbai School favoured by industrialists and socialites to educate their progeny was gripped by scandal when their enterprising brats bribed a peon and persuaded him to leak examination papers. When caught, their parents helpfully put aside their avid page 3 appearances and got busy trying with expensive celebrity lawyers to defend their cheating kids. Ultimately a compromise was worked out because the school as well as the parents wanted to avoid an public humiliation. We learn that 22 students were asked to leave go, but without a formal expulsion. Considering that many of the children routinely see their parents bribe everybody that matters to get what they want or to remain in the limelight, it is probably unfair to blame many of them for merely emulating their parents.
Readers would remember reading in these pages about how the Bombay Stock Exchange’s (BSE) whistleblower, Atul Tirodkar was a victim of interference and harassment by the bourses’ broker-directors. Tirodkar was suspended for trying to prevent the BSE president from accessing information on brokers’ trading positions. Sebi responded to the Tirodkar episode by asking all BSE broker-directors to resign. A new set of broker-directors was appointed after the next round of elections, but old habits apparently die hard. The BSE’s new Executive Director too recently approached Sebi to complain about the frequent interference in his functioning by the BSE’s broker directors. Maybe, if Sebi revamped stock exchange boards, keeping in mind its own demands on independent directors for companies, such directors would help and support EDs at bourses. But before that, Sebi is probably going to follow up on its investigations and supersede some stock exchange boards to make room for a clean up. -- Sucheta Dalal