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Subramanyam bail plea rejected

Our Bureau

MUMBAI, July 27

THE CBI Special Court of Mr A.R. Mehra today rejected the bail plea of Mr P.S. Subramanyam, former UTI Chairman, and extended his remand till August 3.

The court also extended the remand of the co-accused in the `UTI scam', Mr M.M. Kapur, Mr S.K. Basu, Executive Directors, UTI, and stockbroker, Mr Rakesh Mehta.

The CBI said during investigations, it was revealed that the UTI had purchased 40,000 shares of Cyberspace between September 25, 2000, and September 25, 2000 for about Rs 3.33 crore from Mr Rakesh Mehta ``when there were no buyers for the scrip even thou gh the market price was ruling around Rs 830''.

Mr Mehta was ``stranded with these shares which he had earlier purchased from UTI as part of a fraudulent and dishonest design to subscribe to the private placement''. The agency said the UTI management, especially Mr Kapur, was involved in the deal.

It said that purchase was a precursor to the private placement. The CBI has alleged that the four conspired to cause ``wrongful loss amounting to around Rs 32 crore'' by subscribing to private placement of 3,45,000 shares of Cyberspace Infosys. It has sa id that Mr Subramanyam, Mr Kapur and Mr Basu reversed an investment advice of the equities research cell of UTI, which they themselves had endorsed.

It said it also needed to carry out on ``hot pursuit'' basis examination of vital witnesses from UTI, SBI Capital Markets, BSE, NSE, and UTI Securities. It also needed to examine the ``frequent foreign trips made by the officials at the expense of invest ors of UTI''.

Rejecting the bail applications, the judge said that after having gone through the case diary, he was convinced that ``more glaring details have been unearthed...and the UTI scam has opened a Pandora's box with far-reaching ramifications''.

Since another accused, the promoter of Cyberspace Infosys, Mr Arvind Johari, has been in the custody of Mumbai CBI only for a few days, custody of the other accused is needed for confronting him with the others, Mr Mehra added.

Counsel for Mr Subramanyam said at the time of investing in Cyberspace, the scrip was one of the stock market's favourites. The lead managers to the placement, SBI Caps and UTI Securities, had in their equity research reports waxed eloquently about the c ompany.

Besides, the Finance Ministry itself had taken a keen interest in promoting technology companies in Uttar Pradesh and Bihar. He said the Finance Minister had even spoken to Mr Subramanyam on various such policy issues.

UTI was not the only institution to subscribe to the shares of Cyberspace. Other reputed entities such as Reliance Mutual Fund, Jardine Fleming, LIC Mutual Fund and GIC Mutual Fund had also invested in the company, he added.