m The US-64 scheme has 2 crore investors,

the bulk of whom are small savers, retired

people, widows and pensioners.
m Besides the US-64 the UTI runs 87other
schemes giving investors various options.
m But the US-64 has been most popular,
giving returns as high as 18% in 1993 and
94.
ormer UTI chairman P S Subramanyam
and two executive directors - M M Kapur
and S K Basu - and a stockbroker Rakesh
G Mehta, were arrested in connection
with the 'UTI scam'.
UTI had purchased 40,000 shares of
Cyberspace between September 25,
2000. when there were no buyers for the
scrip. The market price was around Rs
830.
4. With knowledge that the UTI was in a state of
collapse, the Chairman organized a high
profile propaganda campaign promoting
UTI.
B. Two month prior to the freezing of dealings
in UTI shares, a gigantic sum of Rs. 4,141
crores was redeemed.
C. O this Rs.4,000 crores (97%) were corporate
investments.
D. They were re-purchased at the price of Rs.
14.20 per share (face value Rs.10) when in
fact its actual value (N4 ³ net asset value)
was not more than Rs. 8. 4s a result UTI·s small
investors lost a further Rs. 1,300 crores to the
big corporate.
ßormer UTI chairman PS Subramanyam and
two executive director--- MM kapur and SK basu
and stockholder Rakesh G mehta were arrested
with the UTI scam.
m Both the Union government and the Unit Trust of
India (UTI) have failed to take any action against
tainted UTI officials, as well as against corporates
exposed by the Tarapore committee way back in
January 2002.
m This is evident from the 4ction Taken Report (4TR)
tabled before Parliament on May 10 about the JPC
report regarding the 2001 stock scam.
m The final JPC(Joint parliamentry committee) report
had recommended an enquiry of the secondary
market transactions done by UTI in shares of 89
companies identified by the Tarapore committee.
m It had also recommended departmental action
against UTI officials involved in Cyberspace scam.
m Moreover, Tarapore panel had exposed the deals
behind the US-64 crisis and how banks had privy
information regarding the ill-health of the scheme
m However, in terms of action taken against these
findings, both the government and UTI have failed
to finalise any proceedings against the accused
other than referring a few cases to the 4dvisory
Board on Banking, Commercial and inancial
rauds, a pre-investigative body under the finance
ministry.
m UTI chairman M Damodaran was unavailable for
comment.
m 4fter the Tarapore committee report unearthed
the dubious deals between UTI officials and
leading corporates, UTI ordered an audit of the
investment decisions taken in 19 firms. But no
action has been taken against these companies or
against the concerned UTI officials.
m The UTI-1 administrator has informed the
government that with reference to civil
proceedings against ex- chairman PS
Subramaniam and other former UTI officials, "UTI is
seeking an external legal specialist and further
action will be considered on their advice."
m On UTI's role in the Calcutta Stock Exchange
payment crisis, the government has directed SEBI
to intervene in the matter, since UTI has failed to
initiate any action against its former ED BG Daga,
who has been indicted in the JPC report.
m Sources said the regulator is expected to summon
Daga for a hearing in this matter.
m SEBI has also ordered an investigation to ascertain
any broker nexus among Stock Holding
Corporation (SHCL) officials.
m 4s for the government, its reaction has been
deplorable, to say the least.
m inance minister Yashwant Sinha is on record
saying that he was not going to lose his sleep
because of the US-64 scam. He can of course
afford not to lose his sleep, especially because
millions of small investors have already lost their
sleep on his behalf --- after losing their life-time
savings, their only cushion for the bad days.
m In the initial days of the scam, the government did
virtually nothing except doling out empty
assurances to the investors that everything will be
okay in due course.
m Moreover, to date, there seems to be no concrete
evidence of a government intervention to redeem
the life of these hapless investors.
m Equally deplorable is the ¶clarification· given by
Sinha that he was kept in dark over the US-64 issue.
m The fact is that the day-to-day functioning of the
banks and non-banking financial institutions is
regularly monitored by a joint secretary in the
finance ministry, and there is no reason to believe
that Sinha was unaware of what was happening in
the UTI.
m urther, even if one takes a lenient view, grants
Sinha the benefit of doubt and takes his
¶clarification· at its face value, should not he own
moral responsibility for what had been happening
under his very nose, and resign forthwith?
m On July 7, the UTI announced a repurchase price
of Rs 10 per unit in a bid to console the investors
and offset the criticism.
m The least they had paid for these units in July 2000
was Rs 13.40 per unit, not to talk of those who had
purchased units mid-year.
m This means that these small investors will lose at
least Rs 3.40 for each unit. Thus a person holding,
say, 1,000 units will stand to lose Rs 3,400 on this
count.