The Hindu Business Line : UTI board to decide on RIL investment probe

THE board of the Unit Trust of India will take a final view at its meeting on April 11 on whether to refer to a pre-investigative body, the controversial private placement aggregating over Rs 1,000 crore made by the trust in Reliance Industries Ltd in 1994-95.

The board of trustees of UTI will on that day consider the independent audit report on that investment decision and decide whether the case needs to investigated further. If the UTI board decides that that investment is a fit case for pre-investigation, it will be referred first to the Central Vigilance Commission (CVC).

The CVC will then take a view on whether an agency like the CBI should investigate the case, according to the Chairman of the Joint Parliamentary Committee (JPC) on the 2001 securities scam, Mr Prakash Mani Tripathi. The Tarapore Committee appointed by the Government had also recommended that the investment in RIL by UTI was a fit case for being referred to a pre-investigative agency.

Interestingly, the CBI had sought the approval of the Finance Ministry in 1997 during the tenure of Mr Deve Gowda as Prime Minister to initiate action in the RIL case. However, the agency was not granted approval then, officials said.

At its sitting on Wednesday and Thursday, the UTI management informed the JPC that the April 11 board meeting would also consider the audit reports commissioned by UTI on the trust's investments in nine other large corporate groups. If the audit reports relating to UTI's investment decisions in nine more corporates were also ready over the next couple of days, the board would decide whether those cases also needed to be referred to a pre-investigative body.

The Tarapore committee had taken up 19 investment decisions of UTI, which it felt needed to be audited. In the case of UTI's investment in RIL, the committee had said that it was a fit case for being referred to a pre-investigative body. Three independent audits were done in the past on this particular investment decision of UTI.

Among UTI's investment decisions in other corporate groups, the committee had recommended an audit into the case of the Essar group and HFCL also.

At Thursday's JPC session, the former Chairman of UTI, Mr P.S. Subrahmanyam, said that he used to keep the Finance Ministry informed from time to time about the state of affairs of the mutual fund.

Mr Subramanyam told the committee that there could be contradictions in the recommendations of the equity research cell of the trust and also the fund managers.

The Tarapore committee had said that the former Chairman had ignored the recommendations of the equity research cell in a few cases, leading to debatable investment decisions and loss to the trust.

On the evidence so far, there did not seem to be any extraneous government influence on the investment decisions of UTI, Mr Tripathi said.

On Friday, there will be further deposition before the JPC by both Mr Subrahmanyam and the present UTI Chairman, Mr M. Damodaran.

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