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Judicial custody for Subramanyam, 3 others till Aug 7

Priya Ganapati in Bombay

Special Judge S R Mehra on Friday rejected the bail application of P S Subramanyam, the former chairman of Unit Trust of India, two other fund officials and a stockbroker, all accused of financial wrongdoing.

"All the accused have been remanded to judicial custody till August 7," the judge said.

Former UTI Chairman P S Subramanyam and executive directors M M Kapoor and S K Basu were arrested by the Central Bureau of Investigation on July 21, along with stockbroker Rakesh Mehta.

They were charged with causing a wrongful loss of Rs 320.8 million to UTI over investments in software company Cyberspace Infosys Ltd.

Subramanyam had a mobile phone in different name, says CBI

The CBI in its remand application before the court stated that during the custodial interrogation of the accused it was revealed that the investment decisions by the UTI in various other cases may have been taken for reasons other than for commercial considerations or business expediency.

The CBI said that the former UTI chief used a personal mobile phone, which he had not admitted to having as late as on August 2.

The CBI said that the investigating agency was able to establish this not on the admission by P S Subramanyam, but through the statements of other vital witnesses and by sustained interrogation.

The CBI said that the details of the calls made from the said mobile phone would be received from the cell phone company on Friday evening.

CBI lawyer Gopal Sharan urged the court to extend by one day the police remand of former Unit Trust of India chairman P S Subramanyam as the investigating agency had come across certain vital documents which would throw further light on the case.

The CBI said that Subramanyam has to be confronted with the call details of his mobile phone which he had subscribed to in a different name.

The agency also said that he also has to be confronted with some other vital documents received from the UTI chairman's secretariat on August 2.

The CBI believes that these documents contain vital incriminating information and might allude to a conspiracy regarding the buying of shares of Cyberspace Infosys by the UTI.

The agency said that the remand of stockbroker Rakesh Mehta should be extended as vital incriminating information in the case against the accused had been obtained from the Bombay Stock Exchange, the UTI and other brokers.

The CBI accepted that the custody of UTI executive directors S K Basu and M M Kapoor was not required, but the CBI prosecutor, however, argued that it was opposed to the accused getting bail.

The accused were top officials of UTI and may influence other officials if granted bail.

According to the CBI's investigation, UTI's Equity Research Cell had advised UTI's former chairman and executive directors not to subscribe to Cyberspace shares.

The officials initially accepted this recommendation but subsequently reversed the decision, a CBI statement said.

The CBI said that it had registered a case under sections of the Indian Penal Code relating to cheating, criminal misappropriation of money and criminal conspiracy.

Arvind Johari, promoter of Cyberspace Infosys, has been remanded to police custody till August 7 in the same case.

CBI has alleged that Johari had induced UTI top officials through Rakesh Mehta to buy 3,45,000 shares of Cyberspace at an exorbitant price.

Satish Maneshinde, Subramanyam's lawyer, has said that his client is innocent.

The UTI muddle has also rocked Parliament for the past few days. On Friday, Lok Sabha Speaker G M C Balayogi announced in the House that the Joint Parliamentary Committee chairman probing the stock market scam will also look into the allegations made by the opposition members regarding the UTI scam.

Union Finance Minister Yashwant Sinha on Thursday had rejected the Opposition demand for a joint parliamentary committee on the UTI muddle and also said that his resignation will not 'resolve' the issue.

He had, however, assured the Rajya Sabha that the Central Bureau of Investigation will probe all aspects, including controversial telephone calls from 'higher ups' to former UTI chairman P S Subramanyam.

Last week, Judge Mehra had rejected the bail application of Subramanyam, and three others, and extended their police custody till August 3.

The judge had also asked the CBI to come out with a white paper on the issue so that no angle would be left out.

UTI manages Rs 575 billion in assets, about two-thirds of the total assets of the Indian mutual fund industry. It has about 41 million investors in its 87 schemes.

A stock market slump caused huge losses for the fund which was heavily exposed to equities.

The cash-strapped fund froze redemptions in its flagship US-64 scheme on July 2, which drew protests from investors and caused an uproar in Parliament.

UTI was forced to re-open the window for small investors, and has started accepting redemption requests for up to 3,000 units per investor from August 1. However, not too many investors have been queuing up to sell.

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