CBI raids former UTI chairman
P S Subramanyam, top Trust officials
Onkar Singh in New Delhi
 The Central Bureau of Investigation said on Friday that the Anti-Corruption Unit of its Bombay branch had conducted raids at the residence of former Unit Trust of India chairman P S Subramanyam and several other top UTI officials.
The CBI also raided the premises of executive directors M M Kapoor and S K Basu, general manager Prema Madhuprasad and broker Rakesh Mehta of Renaissance Securities.
The raids are in connection with a case of conspiracy relating to private placement of funds. Apparently, UTI funds were diverted to buy some shaky IT stocks which led to colossal losses for the Trust, forcing it to put curbs on trading of US-64 units.
According to S M Khan, official CBI spokesperson, the raids began at 6 a.m. and are still continuing at Subramanyam's house and the former UTI chief was present at his residence during the raid.
"We have information that the former UTI chief along with others conspired a private placement of Rs 320 million with Cyberspace Ltd," CBI said.
The Anti Corruption Unit of the Bombay branch of the Central Bureau of Investigation would interrogate Subramanyam, Kapoor, Basu, and Madhuprasad on Friday night in connection with their decision to buy the shares of Cyberspace Limited, one of the 30 shell companies floated by the Johari brothers who were arrested defrauding the public sector banks and general public in May this year.
Subramanayam and three serving officials of the UTI have been booked under the Prevention of Corruption Act for cheating and criminal conspiracy," the CBI spokesperson told newsmen at a press conference on Friday evening.
"During the course of our investigations into the financial dealings of the Johari brothers, we came across the details of this deal. What is surprising is that the four officials had initially rejected the proposal put forward by the Joharis to subscribe to the preferential allotment of equity of Cybrespace Limited," he added.
"The proposal was rejected on the basis of the findings given by the research cell of the UTI. This was done on July 17,2000, but within four days they accepted another proposal from the Johari brothers which was an exact replica of the earlier proposal. This time the research cell was not called to give its findings and bought 345,000 Cybrespace Limited for Rs 930 per share. The total sum invested was to the tune of Rs 328 million," Khan said.
When asked if the CBI would be looking into other decisions taken during the tenure of Subramanyam, Khan said that nothing could be ruled out at this stage as the raids were still continuing.
He also denied that the raids were part of a witch-hunt. "We registered a case on July 18 on the basis of the information developed through our own sources," he said.
The sources said the raids, which commenced at six in the morning were being carried out simultaneously at both the offices and residences of the five persons.
"Subramanyam and others conspired and privately placed shares at a price of Rs 930 per share. The Bombay Stock Exchange and the National Stock Exchange have suspended trading in the company's shares from mid-April," they said.
According to CBI sources, UTI's own equity research cell and other fund managers had strongly opposed the move.
The outcome of the raids will be known when CBI gives further details on the raid and seizures, if any.
The capital markets has been abuzz since Monday morning with talk of a CBI 'raid' on UTI officials.
Brokers say that market sentiment was heavily dampened because of the raids.
A UTI official, when contacted, refused to commnet on the matter.
Analysts opine that with the JPC probing the recent capital market scandal and the talk that UTI holds substantial quantities of the so-called 'K-10' stocks have led to these raids.
The US-64 fiasco, which Subramanyam put in his papers, and the shock to investor confidence because of the Trust's move have already catapulted UTI into unflattering limelight.
Union Finance Minister Yashwant Sinha had earlier said that the government would order a probe into allegations of insider trading connected with redemptions of US-64 units just before the UTI suspended withdrawals on July 2.
The suspension has since been partially removed with effect from
August 1.
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