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Vital file on UTI deal with Reliance missing

Shaji Vikraman

NEW DELHI, July 25

IN a new twist to the controversial private placement of equity by the Unit Trust of India in Reliance Industries Ltd (RIL), aggregating Rs 775 crore, the file relating to this case has been reported missing in the Government.

Although the Central Bureau of Investigation, which probed the case in 1994-95, sought the approval of the Government to prosecute some top UTI officials, the Finance Ministry did not agree. This was during the tenure of Dr Manmohan Singh. Subsequently, the agency pursued the case again in 1997, but was denied permission to take further action against the officials.

The controversial placement of equity took place in the last quarter of 1994 when, besides UTI, two other investment institutions -- LIC and GIC -- made an investment of Rs 945 crore in RIL. The shares of RIL were picked up by the three institutions at R s 385.

Of this, UTI's investment alone aggregated Rs 775 crore. Besides this off-market equity deal, the UTI also subscribed to debentures issued by RIL with warrants attached. These warrants were converted into shares in March 1995 at Rs 401 per share when the ruling market price was Rs 280, indicating a clear loss to the investment institution. The share price of RIL then declined further.

The CBI's contention then was that the investment was made with mala fide intentions. At that time also, there were allegations about "instructions" having been given to the UTI top brass from New Delhi to invest in the company.

With the Cyberspace issue now in the spotlight, there is pressure to look into this investment decision of the UTI also by either the CBI or the Joint Parliamentary Committee probing the market manipulations of 2001.

The investment by UTI in RIL, with a lock-in of five years, had attracted a lot of criticism. The UTI chairman then was Mr S.A. Dave.

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