Chennai: “I sat with Rajiv and pleaded for Umar Khalid. For the first time in his and my life, I asked something of him that was personal. The BJP is working to frame him. Rajiv of course does not control the vast machine but he matters.” The above lines are from an email that Dr Ajay Shah, who is known to be closely connected to the mega crore NSE co-location imbroglio, wrote to Professor Rajeshwari Sengupta of the Indira Gandhi Institute of Developmental Research (IGIDR). Umar Khalid is the former JNU student and son of an ex-SIMI member, who was booked by the Delhi Police under the Unlawful Activities Prevention Act (UAPA) for his role in Delhi’s anti-Hindu riots that broke out in February 2020 and claimed over 50 lives. Before Khalid was arrested, Ajay Shah, as per his own admission, was busy meeting top bureaucrat “Rajiv” to save the left-leaning fundamentalist from the “BJP frame-up”. Ajay Shah is, of course, much more than an economist, he is a member in good standing of the lobby that is arrayed against the government led by a transformational leader, Prime Minister Narendra Modi.
In a follow-up email, Dr K.P. Krishnan, the 1983 batch IAS officer, who was known to be the blue-eyed boy of UPA Finance Minister P. Chidambaram, wrote to Dr Ajay Shah in 2010. In the below emails the similarity between the way once NSE MD Chitra Ramkrishna’s Guru was guiding her and the mails by Dr Krishnan to Ajay Shah may be discerned. The star civil servant, who remains a favourite of North Block to this date, gives advice on whom Ajay Shah has to cultivate. Truly a friend in deed.
Email dated 10/19/2010:
“Besides SK and other Folks like Regular Bank and Fund staff there are some others like:
1) Subbu (Former P.S. to Manmohan who is now Adviser to ED Bank)
2) Jawaid (Former JS PMO who is now adviser ED Bank)
3) Pulak Chatterji ED Bank
4) Arun Singh, Deputy Chief of Mission, Indian Embassy DC (who) to my mind. Each of them is a big star civil servant and will surely hold important positions in the near future. So they are worth intellectually influencing. All of them other than Pulak are good friends. I know Pulak too but can’t claim to be his friend. I can write to all of them introducing you nicely and set-up a meeting or a lunch so that you have good conversations. Shall I? I am of course leaving out Josh, Arvind et al who (sic) you know directly.
The above emails and several others were recovered from the laptop and personal computers of Ajay Shah when he was raided by the Income Tax Department in 2018 in connection with the NSE scam. These emails and more in the possession of The Sunday Guardian indicate that Ajay Shah through his friendship with K.P. Krishnan and other bureaucrats ran what may be termed “influence operations” during the UPA period between 2004 to 2014. This continued for some years even after the NDA government came to power in 2014. The new government saw relentless efforts by PM Modi to cleanse the system of the corruption endemic to previous administrations, and after a while had an effect on North Block. The Sunday Guardian is not in a position to ascertain if both Ajay Shah and his buddy K.P. Krishnan were actually close friends of the who’s who of Indian civil administration as they claimed, but more light on the profile of both the lobbyists reveals a lot.
The Market Mafia, a book written by Mumbai based Hindu Business Line correspondent Palak Shah, revealed details of the network of Dr Ajay Shah and his wife Susan Thomas. The book claims that Susan Thomas had faked her PhD degree from the University of Southern California even as she enjoyed the advantages of proximity to the NSE and a friendly regulator, the Securities and Exchange Board of India (SEBI). Shah, a known lobbyist for NSE, became an advisor to India’s Finance Ministry under Congress politician P. Chidambaram for nearly 10 years. This was the time when both Ajay Shah and friends such as Super Bureaucrat Dr K.P. Krishnan ruled the roost. Colleagues say that the duo played a role in the appointment of key bureaucrats and even SEBI officials, a charge made in the book as revealed in “The Market Mafia”. Another book, “Absolute Power” by scam-buster Sucheta Dalal and her partner Debashish, highlighted the inside story of the National Stock Exchange’s amazing success, which led to hubris, regulatory capture and the algo scam. Only during Modi 2.0, with a cleansing of North Block, has what is known as the PC Network (after its hero P. Chidambaram) ceased to hold the immense influence that it once had.
A slew of email exchanges between both Ajay Shah and Dr Krishnan is now part of the probe by the Central Bureau of Investigation (CBI), which is looking into the NSE Co-location scam. So far, the CBI has arrested Chitra Ramkrishna after reports appeared of emails with a so called “spiritual guru”. This hitherto publicly unknown guru guided her in such non-spiritual matters involving finance such as key appointments to the NSE. The guru also gave her the names of the civil servants in the Central government who needed to be influenced in order for shenanigans in stock exchanges to thrive
Krishnan is a 1983 batch Karnataka cadre IAS officer who still enjoys the perks of the power even after his retirement from service, untroubled by the CBI or other agencies. In May, Krishnan was appointed an advisor to PFRDA, the pension regulatory body. It is understood that Finance Minister Nirmala Sitharaman, who is working to fulfil the mandate for clean and rapid development given to her by Prime Minister Narendra Modi, will investigate and take needed action in the matter. Under the FM’s watch, the happenings at the NSE are finally being seriously probed and responsibility assigned. A report prepared by the Income-Tax Department after a search operation at Ajay Shah’s premises says that based on the emails, “Shah has been looking for cultivating relations with senior bureaucrats for lobbying business. He (according to the report) among other enterprises lobbied for Religare Health Insurance.” On 8 June 2017, Dr Krishnan wrote to Ajay Shah: “Let us talk in person when we meet this coming week.” On 21 July 2017, Ajay Shah wrote to Dr Krishnan: “TN has an agreement with the Singh brothers to buy 100%. IRDA is foxed as they have never seen an insurance company being bought 100% percent before. Their permission is required for the transaction to go through. They said something about asking the DFS (department of financial services). Do you have suggestions for board members? IRDA has asked that the chairman must be independent.”
Another email recovered by the I-T Department shows that former NSE MD and CEO Ravi Narain requested Ajay Shah to speak to Raghuram Rajan (former RBI governor appointed by the UPA) to seek his help in resolving allegations of conflict of interest. On 8 November 2010: Narain wrote to Ajay Shah: “Can you brief him on this whole exchange issue and the conflict of interest so deeply so deeply embedded. If he writes, it will help a lot.” Rajan is another individual, who has thus far remained outside the range of those questioned by the agencies examining the stock exchange scam.
In 2010, NSE had officially announced its co-location trading services, the use of which was out of the knowledge of India’s retail investors and mutual funds who could have lost out in the race of latency trading. Then, the NSE was also locked in a fierce battle for supremacy with a competing exchange, which was attacked and almost destroyed by the cabal through the witting or unwitting help of top bureaucrats such as Krishnan, C.B. Bhave, Ajay Shah and Narain. Several news stories in leading business dailies report that Krishnan and Chidambaram put their weight behind C.B. Bhave for his appointment as SEBI chief even when PM Manmohan Singh was opposing it. Bhave is another individual, who seems to remain under the radar of the investigations being made on the mega financial imbroglio as a consequence of the order of PM Modi to ensure that stock exchanges in India be cleansed of dubious elements. Despite this, efforts remain ongoing to replace a Tweedledum with a Tweedledee, in other words, a person close to the “PC network” with another, so that the good times for market manipulators continue at the expense of mutual funds and retail investors. It was the stock exchange scam during the tenure in office of Finance Minister Yashwant Sinha that cost the BJP enough urban votes to lose the 2004 Lok Sabha polls to the UPA. Today, many times more investors are in the stock market, which is why market manipulation once unravelled as happened during Yashwant Sinha’s tenure may be politically very harmful for the BJP. Fortunately, for the party and retail investors, Prime Minister Modi and Finance Minister Sitharaman are overcoming sabotage and resistance by a section of officials to cleanse stock exchanges in India of the shenanigans that have given them a less than stellar reputation among investors at home and abroad.
23 September 2010: Dr Krishnan wrote to Ajay Shah: “Haven’t yet read the order but will do so tomorrow. I’m sure Abraham would have done a good job of it. On all your questions, let us chat tomorrow after I have read the order.” The “Abraham” referred to here is the former wholetime member of SEBI, who had come out with a major order against a rival of the NSE, which led to delays in the launch of their equity exchange, thereby ensuring that the rival exchange was kept out of the race against NSE.
It is important to note that several secret privileged documents on government policies were recovered from the digital database of Ajay Shah. As per the income-tax officials, Ajay Shah claimed in his statement, recorded under Section 131(A) of the IT Act, that he was collecting all possible material in his defence against a defamation suit filed by Jignesh Shah. However, the IT officials say that it still does not suitably explain how Ajay Shah was in possession of such documents and who gave it to him. It is believed that Ajay Shah was using his high patronage among the bureaucrats and government officials to collect various documents, which also included Cabinet notes on potential policy announcements. The fax numbers of the senders of the information are those of key officials in important ministries, but this aspect is yet to be made public, although it must be getting investigated. Breach of the Official Secrets Act by a public servant cannot be condoned.
On the other hand, Ajay Shah and his close family members including wife Susan Thomas and brother-in-law Suprabhat Lala were accused by whistle-blowers of indulging in extracting data from the NSE and putting it to commercial use for developing an algo trading software. It has come out that NSE was not sharing such sensitive data with anybody except Ajay Shah and Susan Thomas, who was then a professor with the Indira Gandhi Institute of Developmental Research. Subsequently, it has also come to light that Thomas used a similar modus-operandi to get trading data from MCX, India’s largest commodity exchange, and allegedly used it for developing algo software.
Nearly five years after registering an FIR, the CBI is yet to arrest Ajay Shah, though he has been questioned on a few occasions. Susan Thomas was sacked from IGIDR, but she was not named in any of the investigation reports by SEBI. The trail of evidence of the lobby factory that the PC network ran to influence the high and mighty in India’s bureaucratic circles makes it clear that far more intensive investigation is needed. This seems to be facing opposition from some powerful individuals so as to stall their arrest. Those keeping a watch on the exchanges say that without such interrogation of the key individuals involved, the co-location scam investigation cannot move ahead in a manner that ensures accountability for the way in which retail investors have been short-changed through market manipulation by elements opposed to the clean-up operation ordered by the PMO to ensure that full confidence and credibility returns in the exchanges in India. What is needed is efficient and clean hands who are outside the circle of those in leadership positions in various exchanges who have acted in a manner that put personal above public interest.