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Monday, Jun 03, 2002

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Rs 1,000 - cr private placement -- CVC to look at UTI's Reliance exposure

Shaji Vikraman


THE Finance Ministry has decided to refer the controversial case of private placement of equity by Reliance Industries Ltd (RIL) with the Unit Trust of India (UTI) aggregating Rs 1,000 crore in 1994, to the Central Vigilance Commission (CVC) for further action.

The Ministry's move is well in line with the recommendation of the Tarapore committee, which had said that the investment in RIL by UTI was a fit case for being referred to a pre-investigative board.

In the Government's reckoning, the CVC is the pre-investigative agency.

The CVC will now have to take a view on whether this investment decision of the UTI should be referred to the Central Bureau of Investigation (CBI) for investigation.

Interestingly, the CBI had sought the approval of the Government, including the Finance Ministry, in 1997 to initiate action in this case. However, the United Front Government, headed by Mr Deve Gowda, did not grant approval, according to officials.

The investment by UTI in RIL through a private placement in 1994-95 had created a furore, as the pricing was at a premium to the market price. Besides, there was a restriction by way of a lock-in period also for the investment. Even last year, this issue had figured prominently in Parliament. The Tarapore committee was appointed last year by the Finance Ministry in the wake of the crisis that engulfed UTI. The committee's mandate was to examine the investment decisions of UTI over the last 10 years. The 3-member committee, which included the former director of the CBI, Mr R.K. Raghavan, and former Managing Director of the State Bank of India, Mr M.G. Bhide, had taken up 19 investment decisions of UTI.

In the RIL private placement case, it was noted that three independent audits had been done in the past on this investment decision alone.

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