Street divided over Arun Sathe's appointment to Sebi

The appointment of senior lawyer Arun Sathe, who is also a Bharatiya Janata Party (BJP) politician and brother of the Lok Sabha speaker Sumitra Mahajan, as a part time member of the Securities and Exchange Board of India (Sebi) has evoked strong views among various stakeholders in the market.

While some like former Sebi chairman Damodaran feel appointing a political person in itself does not amount to "overt or covert" politicisation of Sebi, others are critical about the BJP government's urge to have its "ideologists" in every institution in the country.

In an email response to Business Standard queries on the controversy, Damodaran, who does not know Sathe personally, said: "It is my considered view that political or ideological preferences do not completely define or explain a human being."

According to the former bureaucrat, who wears many hats, the appointment of a political person to a part time position on the Board, did not constitute overt or covert politicisation of the regulator. "If the appointed person currently holds an official position in a political party or organisation that could be termed inappropriate," he added.

Damodaran felt that the appointment would not affect either the credibility or the autonomy of the regulator. He pointed out that Sebi has in the past, had a part time member with a political past and it did not adversely influence the outstanding quality of his contribution to the Board. "I may add that securities market regulators like Sebi need as many lawyers and accountants as it can get at all levels."

Others in the Street are not very impressed with the move. Senior market expert, entrepreneur and columnist R Balakrishnan said, "The way the appointment has happened seems that the BJP is keen to have its ideologists in place everywhere. The person may be qualified, but at the ripe age of 75, it is clear that the first criterion has been political affiliation to the ruling party."

Balakrishnan added that when Sebi talks about governance and retirement age, this appointment smacks just of politics taking precedence over governance. "And the candidate himself has been blunt enough to acknowledge that without his political leanings, he would hardly have been chosen. This gives us a sneaky feeling that BJP wants to ensure that in every move in every sphere of business and life, it has its political interests protected and guarded. Does not matter if governance and transparency are the casualties."

Shriram Subramanian, founder of Ingovern Research, a proxy advisory firm that studies governance issues, said, "We need good people in all institutions. Look at the mess they have created in FTII with the Gajendra Chauhan appointment. In Sebi, one would like to see technocrats. It should have representation of people from capital markets."

Subramanian feels party affiliation does not matter as long as the person is respected in his field of expertise. "In the US, everyone is affiliated to one party or the other. What matters is whether the person is a prominent lawyer and has earned respect and is valued among his peers."

In an interview to Business Standard on Wednesday, 75-year old Sathe candidly attributed his selection to his party ties and sounded confident of performing his role effectively. The interview went viral on social media evoking shock among the critics, but was hailed as a "honest" and "refreshing" by BJP supporters.