Centre denies terror outfits have sneaked into stock market

The Union government on Tuesday categorically denied in the Supreme Court the allegation that certain terrorist outfits had entered the stock market surreptitiously. In a fresh affidavit on the PIL petition filed by the former Union Law Minister, Ram Jethmalani, and others alleging inaction in bringing back Rs. 70,0000000000 in black money stashed away in foreign banks, the Centre said “The government, at present, does not have any reliable credible information of any surreptitious entry of terrorist outfits into the stock market.” The affidavit said “However, the Securities and Exchange Board of India as well as the stock exchanges have been administered sufficient caution to look out for any suspicious or irregular entrant into the stock market activity.” On the charge that fictitious firms companies had entered the stock market, it said, “Upon enquiry, it has been confirmed by the Bombay and Madras stock exchanges that no fictitious or notional companies can be stated to be involved in stock market operations.” On banning participatory notes, the government said “Foreign Institutional Investors (FIIs) are regulated entities with the SEBI being regulator. By virtue of the 1995 Regulations, an FII may issue participatory notes with Indian instruments as the underlying securities. Downstream issue of participatory notes can also be done to regulated entities. All FIIs are mandated to report at the end of every month, in a prescribed format, all information relating to participatory notes issued by them including the names of subscribers to the said participatory notes. The FIIs are also required to undertake that the investor or its associates have not issued, subscribed to or purchased any participatory notes from Indian residents or non-resident Indians during the reporting period.” The affidavit said “In view of the fact that participatory notes are market instruments and when they are created and traded abroad, it is not possible to ban the issue of the said instruments. However, they are subjected to regulation and are effectively being regulated by the SEBI.” “Unfounded fears” The Centre said the apprehensions expressed by AIADMK general secretary Jayalalithaa in an article were unfounded. “The issue of entry of funds via Mauritius is a matter which has engaged the attention of the Central government. It is stated that there does exist a Double Taxation Avoidance Agreement between India and Mauritius. The Central government is alive [to] and conscious of the potentiality of misuse of the double-taxation treaty. In fact, further amendments to the treaty are being negotiated.” Regarding the investigation in Hasan Ali Khan’s case, the government said the accusations against the Union of India of blatant inaction and that it was interested in protecting powerful individuals, who might be using Mr. Khan and his wife as their nominees/benamis were based on conjectures and surmises and devoid of merits. On the basis of the inputs provided by the Directorate of Enforcement and enquiries conducted thereon, Mr. Khan’s passport was revoked and the Regional Passport Officer lodged a first information report with the Mumbai police, the Centre said, and sought the dismissal of the PIL petition.