The Tribune, Chandigarh, India

Saturday, July 21, 2001,
Chandigarh, India

THE TRIBUNE SPECIALS

50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS

M A I N N E W S

CBI raids house of UTI ex-chief
Tribune News Service

New Delhi, July 20
Just three days ahead of Parliament session, government today appointed a three-member high-level committee to probe UTI activities and the CBI raided premises of former UTI Chairman P.S. Subramanyam in Mumbai on charges of defrauding the country’s largest mutual fund.

The independent committee, which will be headed by former RBI Deputy Governor S.S. Tarapore, has been given three months time to submit its report. The other members are former CBI Director R.K. Raghavan and former SBI Managing Director M.G.Bhide.

The raid was conducted on the residences of Subramanyam, two Executive Directors M. M. Kapoor and S. K. Basu, UTI General Manager Prema Madhuprasad and a broker of Renaissance Securities Rakesh Mehta, CBI spokesman S. M. Khan told a crowded press conference here.

The premier investigating agency has registered a case against them for causing wrongful gain of Rs 32 crore to Cyberspace Ltd, Mumbai, and corresponding loss to the Unit Trust of India.

Even as the raids are still continuing, agency sources said the CBI could arrest the accused as and when they have enough evidence on record to pin them down in the court of law.

According to the CBI investigation Cyberspace Ltd, earlier known as Cyberspace Infosys Ltd, had come out with an issue of private placement of up to a maximum of 1.5 million equity shares on a preferential allotment basis at the price of Rs 930 per equity share during June, 2000.

SBI Capital Markets Ltd and UTI Securities Exchange Limited were acting as “arrangers” to the issue.

On June 28, 2000, a proposal was initiated by Cyberspace Ltd for consideration of UTI authority as to whether UTI would subscribe to the preferential allotment of equity of Cyberspace Ltd at Rs 930 per share.

The CBI investigation has revealed that “Equity Research Cell” of UTI evaluated the offer and recommended not to subscribe in the private placement. In taking this decision, all aspects relating to the performance of Cyberspace Ltd, were considered.

They noted various adverse features while assessing and analysing the company and the decision was, therefore, taken by the Executive Directors and the former Chairman that the UTI would not participate in the offer for private placement, the spokesman said.

However, further investigation revealed that the file was again revived after four days of the earlier decision and without any new development, the UTI subscribed to 3.45 lakh shares of Cyberspace Ltd, and placed approximately Rs 32.8 crore at the disposal of the company, he said.