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July 25, 2001
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Money > Business Headlines > Report July 25, 2001 |
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CBI opens new flank, probes into UTI debenture dealsSangita Shah The Central Bureau of Investigation has begun a new line of investigation, this time into the Unit Trust of India's purchases of convertible debentures in the last three years. The agency suspects the trust could have lost more than Rs 20 billion in the process. On conversion into equity shares, the value of the investments has diminished, the investigative agency suspects. The CBI will look into the price history of all the shares, which have been converted from debentures in the last three years, sources said. The CBI also suspects that UTI officials approved the purchases of debentures as part of the trust's policy to increase the debt component in its portfolio, in line with the Deepak Parekh committee recommendations. But the CBI found traces of irregularities when it found that the private placement deals had been brokered not by the trust's established panel of brokers but by sundry chartered accountants. Moreover, the deals mostly involved fundamentally weak companies. These companies failed to service their debentures and this resulted in UTI's schemes reporting an increase in non-performing assets, sources said. Interestingly, these were just debentures without any riders of not being convertible, but the allotees--UTI in this case--had the option of calling for their conversion into equity shares. On the basis of the alarming increase in its NPAs, the UTI brass is said to have justified exercising the conversion option of debentures into equity. CBI sources suspect the timing was so synchronised that the stock prices were rigged up substantially just before the UTI was due to convert those debentures into shares. Post-conversion the prices crashed, leaving a deep hole in UTI's pockets. According to sources, such conversions took place at a hefty premium to the prices prevalent just a few weeks before the conversion date. "The amount could run into more than a couple of thousands of millions," a source with CBI said. The CBI is also tracking the foreign trips made by former and present UTI officials. It is likely that more skeletons may tumble out as the probe will cover top officials as also middle-rung executives who worked with the trust much before 1998. Powered by YOU MAY ALSO WANT TO READ:
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