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Johari denies paying Rs 5 million to UTI officials through broker Mehta

Priya Ganapati in Bombay

Arvind Johari, the founder of Cyberspace Ltd, the company that is at the center of the 320.8-million UTI scam, has retracted his statement that he had paid Rakesh Mehta, director of Renaissance Securities, Rs 5 million to be handed over to UTI officials.

The Central Bureau of Investigation has said that Mehta, on behalf of Johari, had allegedly paid Rs 5 million to UTI officials to ensure that UTI invests in Cyberspace.

According to CBI, on July 21, 2000, the top executives of UTI decided to subscribe to 345,000 shares of Cyberspace at Rs 930 per share after suddenly reversing their own decision taken few days earlier.

The CBI has said that a criminal conspiracy led to the UTI officials changing their mind after initially declining to invest in Cyberspace.

The investigators contend that part of the reason why UTI officials decided to invest in Cyberspace against the advise of their equity research cell and fund managers could be the money that was paid to them by Mehta on behalf of Johari.

On Tuesday, Johari's lawyer Mahesh Jethmalani told the Sessions Court hearing the case that his client had never said made any such allegations against Rakesh Mehta.

"My client has said that he has never said that he paid Rakesh Mehta Rs 5 million to give to UTI officials. This allegation has not been made by my client at all," Jethmalani said.

Supporting Jethmalani's statement, Mehta's lawyer said that his client was in no way connected with the placement of Cyberspace shares.

"My client did not even get brokerage on this deal. The CBI has unearthed no evidence against him, except for a statement by Arvind Johari, which has been denied earlier. There is no reason to presume that Rakesh Mehta is connected with this case," Mehta's lawyer argued.

The CBI, however, says that Mehta had bought 40,000 shares of Cyberspace from the market.

P S Subramanyam, former chairman of UTI and the prime accused in the case, has also said in his bail application that he has never met Johari or anyone on his behalf.

Johari's retraction in court considerably weakens the case against Mehta. But the CBI has declared that the state has other aces up its sleeve.

"A large number of relevant documents linking him (Mehta) to the criminal conspiracy have been collected from various quarters such as UTI, brokers, National Stock Exchange and Bombay Stock Exchange. Further documents are also likely to come up," the CBI says in its remand application.

On Tuesday, Mehta was granted bail for Rs 300,000, by special judge S R Mehra. Mehta declined to comment on the case. "Johari's submission in court on Tuesday speaks for itself. I have nothing more to add right now. The merit of the case against me is clear for all to see," he said.

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