BANGALORE/KOCHI - The year was 1992. India had been bruised by an unprecedented scam at the Bombay Stock Exchange, which defrauded investors of more than $13.6 million.
When officials began work to set up another exchange that would trade transparently, they roped in a talented young lady renowned for her sharp financial market skills.
Ms Chitra Ramkrishna proved instrumental in setting up the National Stock Exchange (NSE), overseeing its growth to become one of the top bourses in the world, including as its managing director and chief executive between 2013 and 2016.
Her achievements even led her to be hailed as a "queen of the bourse".
But in a spectacular and bizarre downfall that has gripped the country now, Ms Ramkrishna, 59, has emerged as a key dramatis personae in another scam that has raised worrying questions around the lack of integrity of corporate governance in India.
According to an order from the Securities and Exchange Board of India (Sebi) on Feb 11, she is alleged to have shared confidential information, including the NSE's five-year projections and board meeting minutes with an unknown Himalayan ascetic who had been "guiding her for the past 20 years" and had access to e-mail communication.
Ms Ramkrishna, who was described by the Sebi as a "puppet" in the yogi's hands, has also been held guilty for hiring a person named Anand Subramanian as her chief strategic adviser on very generous terms. The position was neither advertised nor was any other person considered for it.
The Sebi order says that Ms Ramkrishna also indulged in "financial misdeed" by increasing Mr Subramanian's compensation arbitrarily and disproportionately. When he joined in April 2013, his annual compensation was 16.8 million rupees (S$300,000), significantly higher than the 1.5 million rupees he earned in his previous job. By April 2016, it had ballooned to 42.1 million rupees.
Ms Ramkrishna left the NSE abruptly in December 2016, citing personal reasons, after spending three years in the top post.
Her tenure was also tainted by another scandal in which certain traders managed to access privileged trading information. The Central Bureau of Investigation (CBI), a federal body, is investigating this case, but in 2019, Sebi directed NSE to deposit nearly 10 billion rupees in an investor fund and barred it from accessing capital markets for six months. It also asked two former CEOs including Ms Ramkrishna, to disgorge 25 per cent of their salaries drawn during a certain period.
The CBI is now investigating the latest allegations. It has arrested Mr Subramanian, 55, and there are strong suspicions based on digital forensic evidence that he was the mystical yogi e-mailing Ms Ramkrishna and convincing her to give him extra pay. As a court rejected her anticipatory bail on March 5, the CBI may arrest Ms Ramkrishna soon.
In its February order, Sebi also imposed a penalty of 30 million rupees on Ms Ramkrishna, 20 million rupees on former board member Ravi Narain and 20 million each on NSE and Mr Subramanian.
But the embarrassing revelations of a top corporate leader taking advice from an unknown third party, appointing and favouring a person in violation of the rules, have triggered questions about checks and balances in the system and dealing a blow to its planned initial public offering.
The NSE board's conduct was "irresponsible, at worst it could be termed complicit", said independent banking analyst Hemindra Hazari.
For instance, he said it was "highly irregular" for the NSE's board members to omit the minutes of an October 2016 meeting that discussed why Mr Subramanian was asked to step down - documentation that could help prevent such wrongs in the future.
Also, despite being aware of Ms Ramkrishna "divulging confidential information to an anonymous individual" and excessively rewarding another, the board had allowed her to resign by lauding her "sterling contribution".
As for whether the regulator could have taken harder action, Mr J.N. Gupta, founder of Stakeholders Empowerment Services and a former executive director of Sebi, said: "From a regulatory angle, I believe Sebi has done enough - it removed the board, brought a new CEO, and now has imposed a penalty on Chitra Ramkrishna."
"The confidential information she shared didn't impact the ordinary investors. A majority of the NSE's highly technical operations don't even involve human intervention, and its trading system and risk management remain among the best in the world," said Mr Gupta.
An NSE spokesman told The Straits Times that the events in question took place more than six years ago. Since then, he added, there have been several changes within the organisation to enhance accountability.
"NSE has operationalised the directives of Sebi on various matters over the years and has taken various measures to further strengthen the control environment including the technology architecture," the statement said.
It added that the exchange is committed to the "highest standards of governance and transparency" and will cooperate fully with Sebi for a "satisfactory closure of the matter".