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July 30, 2001
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Money > Business Headlines > Report July 30, 2001 |
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CBI sleuths looking into GIC-Cyberspace 'link'Sharat Pradhan in Lucknow Close on the heels of the crackdown on top Unit Trust of India officials, the Central Bureau of Investigation has now unearthed a possible nexus between the General Insurance Corporation and the Johari brothers, currently behind bars. CBI sleuths handling the case are reported to have interrogated a top GIC official on Saturday in connection with the purchase of about 35,000 Cyberspace Infosys shares for Rs 35 million. The shares of this company floated by the Joharis, who are the promoters of Century Consultants too, were purchased at Rs 1,000 per share. Cyberspace shares later plummetted to Rs 1.15 per share, before trading in the scrip was frozen. Of the one million Cyberspace shares floated by the Johari brothers, 345,000 shares were purchased by UTI for Rs 328 million at Rs 930 per share. GIC moved in and bought another 35,000 shares. CBI sources said that the Johari brothers "used Rakesh Mehta, a Bombay-based stockbroker (currently in CBI custody), to buy a large chunk of Cyberspace shares through shell companies like Kamal Infosys, Asian Continental Finance, and Century Home Finance". Sources said that the GIC official who was grilled in Lucknow claimed that there were no irregularities involved in the purchase of Cyberspace shares by GIC. "Even top funds bought these shares," the GIC official is said to have argued. However, investigators hold that it was the bulk purchases made my key public undertakings that led many a small investor to pump in is savings in to Cyberspace Infosys, which eventually left a big hole in his pocket. A K Saxena, spokesperson of the Century Investors Forum in Lucknow, too said that most of the small investors purchased these shares largely on account of bulk purchases by UTI and GIC. Saxena said that the small investor finds it difficult to believe that the purchase of these shares by PSUs was done purely on merit. He also said that apart from this, the other factor that led investors to go in for Cyperspace shares was the credibility that the Johari brothers managed to establish by getting Prime Minister Atal Bihari Vajpayee to lay the foundation stone of a software technology park that they proposed set up jointly with the UP government. YOU MAY ALSO WANT TO READ:
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