Under P Chidambaram, the Ministry got the Central Economic Intelligence Bureau (CEIB) to conduct a study to identify promoters who had raised thousands of crores from the stock market in the period 1992 to 1996, but had vanished without a trace, very often without setting up the industries they raised funds for, or who siphoned off funds.

Prime Minister Atal Behari Vajpayee had said, at FICCI on October 24, that these unscruplous investors had destroyed investor confidence -- punishing them would do a lot to restore faith in the market, he said, setting a deadline of three months for this. Briefly, around 4,000 public issues were made in the period 1992 to 1996, to raise Rs 44,000 crore. Of theseissues, roughly 3,000 are trading below par, while another 1,000 have not been traded at all since last January -- less than a fourth of the total scrips listed on the Bombay Stock Exchange (BSE) are traded today. Another 118 companies have `disappeared', or are not traceable, while several hundreds do not file their annual reports.

With this background, Chidambaram approved of the CEIB's proposal to involve the Delhi-based Prime Database in the mammoth exercise -- Prime's job was to evolve a format in which the finance ministry could collect data from various stock exchanges and registrars of companies on companies who had raised funds, and to track them down today.

Prime was also to make available its database which listed the names of each company that raised money in the stock market. With the Finance Ministry's clout, it was expected that CEIB would be able to collect the data on whether these companies had been filing their returns, what these showed, whether the promoters had actually set up theunits they promised to set up, and so on. The entire exercise was to take a year. The former chief of CEIB, S.D. Mohile also appeared on television stating that the study had begun, and several press reports appeared on this.

It now appears, however, that while the study methodology, and its cost were approved of, the funds were never sanctioned with the United Front government on its way out -- the proposal then sat with the BJP's then minister of state for finance R.K. Kumar, till he resigned. It is now believed that the Prime Minister's Office is in favour of paring down the scope of the study to examine only those public issues made in 1994-95 -- this was the boom year, in which Rs 13,000 crore was raised -- as this would compress the study time to be able to meet the Prime Minister's deadline.

Whether any concrete action will be taken, of course, is a matter of intense speculation. The stock market regulator, SEBI, for instance has consistently been at loggerheads with agencies such as Prime, and hasbeen of the view that the problem in the market was not as severe as was being made out.

So, when Prime came out, early last year, with its findings that 118 companies which had raised money had simply disappeared -- that is, they were not traceable -- SEBI had come out with a counter-study for the year 1994-95 alone. This showed, on the basis of data available from 19 registrar of companies (RoC), showed that only ten companies were missing. The problem, however, was that, after eight months of SEBI writing to them, the two largest RoC's -- those of Delhi and Mumbai -- did not deign to furnish a reply.

Of course, what was discovered in even this limited exercise, was frightening. In Ahmedabad, for example, of the 137 that had raised funds in 1994-95, only 52 had filed their balance sheets. And when the Mumbai RoC replied, it was found that only 95 of the 209 companies that raised funds in 1994-95 had actually filed their returns. None of this, of course, triggered off any suspicion, or anyinvestigation.

Interestingly, when, some months ago, the BSE sent notices to wind up or delist 658 companies for non-payment of listing fees, around 130 were returned undelivered, since the companies had either shut shop, or had moved. It is estimated that, of the companies which raised money in 1992 to 1996, 611 have changed their names and around 1,000 have changed their registered offices.

And now, following the Prime Minister's directive, the matter is now being tossed between SEBI and the Department of Company Affairs. SEBI chief D.R. Mehta met the DCA secretary T.S. Krishnamurthy a few days ago, and said that they would provide information on `disappearing' companies and leave it to DCA to tackle them. Mehta is believed to have told DCA that SEBI had no powers to tackle the problem, that all that it could do was to impose a Rs 1,000 fine on companies for not furnishing information. The DCA, on the other hand, is of the view that it is not the regulatory authority to take action against vanishingcompanies.