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NEW DELHI, Dec. 19

THE Joint Parliamentary Committee (JPC) on the Rs 5,000-crore stock scam and the UTI fiasco today gave a clean chit to the former Finance Minister, Mr Yashwant Sinha, even as it indicted stock broker Ketan Parekh as the ``key player'' in the market manipulation.

The then Finance Secretary, Mr Ajit Kumar, and the then UTI Chairman, Mr P.S. Subramanyam, have also not been spared by the committee for their role, which led to the freezing of UTI's flagship scheme US-64.

Criticising the Finance Ministry, the UTI management and the Securities and Exchange Board of India for their failure in being ``more proactive and vigilant'' to detect early warning signals, JPC also nailed IDBI for accentuating the slide in UTI's fortunes. "The present state of affairs of UTI was a consequence of the negligence of its principal contributor, IDBI," the committee said.

The JPC was of the view that there was nexus between Ketan Parekh, banks and corporate houses and recommended that further investigations be instituted into the matter by SEBI or the Department of Company Affairs.

It also said that Mr Ajit Kumar had not ``acted immediately'' on information about the ``impending problems of UTI'' and accused him of handling the issue in a ``routine and casual manner''. As financial custodian of the country the Finance Ministry was duty-bound to protect the interests of the small investors, it said.

SEBI came in for severe criticism for its failure to bring out irregularities and defuse them before the scam blew up. "The stock scam is basically the manipulation of the capital market to benefit market operators, brokers, corporate entities and their promoters and management," the report said.

Addressing a press conference after the tabling of the report in Parliament, the JPC Chairman, Mr Prakash Mani Tripathi, said that the blame for the scam would have to be shared by a host of agencies including the Government. "Everybody will have to share the blame — stock exchanges, regulators — SEBI, RBI and DCA — and the Ministry,'' he said adding that the Government must take immediate steps on the JPC recommendations for restoring investor confidence.

Responding to persistent probing by the media on Mr Sinha could be absolved of responsibility, especially since the Finance Ministry at large was being held responsible, Mr Tripathi said ``I am not giving any opinion... Ask those demanding the resignation if they had not agreed with the report." He said that the report was unanimously adopted.

The JPC found Ketan Parekh was a key person involved in all dimensions of the stock market scam which surfaced in March 2001 as also in payments problems in the Calcutta Stock Exchange and the crash of Madhavpura Mercantile Co-operative Bank.

The committee urged the Government to take all necessary steps to finalise proceedings against Ketan Parekh entities and to ensure that suitable action was taken against them without delay. The report said he was operating through a large number of entities which facilitated hiding the nexus between sources of funds flow and their ultimate use.

On the pay order scam in the Calcutta Stock Exchange, the committee said all events pointed to a close nexus between corporate promoters, defaulting brokers acting on behalf of promoters, broker-directors on CSE and public officials in Stock Holding Corporation of India Ltd and UTI.

It urged that CBI should expedite its enquiries and subsequent action be taken on the complaint filed.

It also wanted SEBI to institute an independent enquiry into whether there was any improper conduct of its officials.

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