Ex-UTI chief arrested

By Our Special Correspondent

MUMBAI, JULY 21. The former Unit Trust of India (UTI) chairman, Mr. P.S. Subramanyam, executive directors of UTI, Mr. M.M. Kapur and Mr. S.K. Basu and stock broker, Mr. Rakesh Mehta were arrested today by the Central Bureau of Investigation on charges of misappropriation of public funds to the tune of Rs. 32.8 crores and produced before a Special Court which remanded them to police custody till July 27.

The Special Judge, Mr. S.R. Mehra rejected their bail applications. However, the judge allowed them to have home food, medicines and clothing. Although shown as accused in the remand application, Ms. Prema Madhu Prasad, General Manager who is also a fund manager was not arrested. The arrests followed CBI raids on their official as well as residential premises on Wednesday. All the accused were subjected to prolonged questioning before their arrest by the Economic Offences Wing of the CBI.

Rejecting their bail pleas, the judge observed that the allegations against them were serious. They were being remanded to police custody so that the CBI could collect more information about their role in the alleged crime. The judge noted, ``the accused are involved in a criminal conspiracy of a shady deal in shares of Cyberspace Infosys Ltd. to cause wrongful loss of Rs. 32 crores to UTI. Therefore it would be in the interest of the State and investors to remand the accused to custody at this juncture.''

CBI investigations have revealed that Cyberspace Ltd., earlier known as Cyberspace Infosys Ltd. a company purportedly dealing in computer software had come out with an issue of private placement of 1.5 million shares on preferential allotment basis at Rs. 930 per share.

The company initiated a proposal with UTI on June 28, 2000 to subscribe to the shares. The top management of UTI forwarded the proposal to its Economic Research Cell (ERC). After evaluating the offer, the ERC recommended against subscribing to the offer. On July 17, 2000, the four officials who were accused decided not to invest in Cyberspace.

However, on July 21, the same set of officials reversed their earlier decision and engaged in a deal of Rs. 32.8 crore for 3,45,000 shares of the company at a rate of Rs. 930 per share on ``extraneous considerations''.

At that time, the market price of Cyberspace was a mere Rs. 2 per share. This company was owned by two Lucknow-based brothers, Mr. Arvind and Mr. Anand Johari. This company's shares were also suspended from trading since April this year.

Send this article to Friends by E-Mail

Section  : Front Page
Previous : Pak. firing in Kargil continues
Next     : Cabinet expansion likely today