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Rediff News  All News  » Business » JPC report indicts P S Subramanyam, absolves Sinha

JPC report indicts P S Subramanyam, absolves Sinha

December 19, 2002 14:12 IST

The Joint Parliament Committee report, tabled in Parliament on Thursday, has indicted former finance secretary Ajit Kumar for failing to resolve in time the redemption problem of the Unit Trust of India.

The report was presented by JPC Chairman Prakash Mani Tripathi in Lok Sabha.

The report has named Ketan Parekh as the 'key player' in the stock scam.

The JPC, which was set up last year, was given three extensions as its scope was enlarged to include probe into UTI fiasco.

The report is in two volumes, one dealing with the crash of the market and the other on the freezing of the Unit Scheme-64 (US-64) of the UTI.

"The finance secretary considered the problem in a routine and casual manner which is not expected from an officer of his rank," the report said in its two-volume report.

A letter was received from the former UTI chairman by the finance secretary on June 30, 2001, in the evening at his residence which clearly stated that the UTI board would meet on July two to consider freezing its flagship scheme, Unit Scheme-64, and converting it to net asset value basis, the report said.

Quite obviously this was a very important piece of news and the finance secretary should have acted immediately, the report said.

But the secretary mentioned this fact to the then Finance Minister Yashwant Sinha only on the morning of July 2, 2001, after the intervening weekend was over.

Indeed, the finance secretary's action should have commenced immediately after discussion on this subject with the joint secretary, capital market division, on June 29, 2001 who briefed the finance secretary on his discussions with the then UTI chairman P S Subramanyan on the US-64 problem.

The meeting between the joint secretary and the UTI chairman was unscheduled and without any prior agenda and there was a discussion on the impending problems of UTI.

Thereafter the joint secretary discussed this subject with the finance secretary, "but no further action appears to have been initiated by the officials of ministry of finance," the report said.

The JPC also indicted Subramanyam for 'keeping the ministry in the dark up to June 29, 2001' about the redemption problem.

The UTI chairman did not talk of the US-64 problem in his letter to the ministry on May 18, 2001 and 'there appears to be no evidence to suggest that there was any meeting or consultation between the UTI chairman and ministry of finance officials between his letters of May 18 and June 29,' the report said.

"Therefore, while the UTI chairman did keep the ministry in the dark up to June 29, 2001 just two days before the redemption was frozen by the UTI board."

Giving a clean chit to Sinha, the report said: "Despite repeated directives from the finance minister to his officials from April 2001 on to find out what was happening in UTI, the officials as they have informed the committee, limited their interaction with UTI to the chairman."

"No analysis was made in the ministry of the UTI chairman's letter of May 18 and the letter itself was treated as on a fresh receipt requiring no more than perusal without analysis or follow up."

"Sinha had told the JPC that he was concerned about the impact on UTI of various adverse developments in capital markets and had instructed his officials to find out the facts from UTI."

The JPC also defended Sinha's statement in the Rajya Sabha, stating that UTI did indeed keep everybody in the dark, 'as the finance minister told the Rajya Sabha.'

However, the JPC said it found "the ministry did little to bring itself out of the darkness, as it had not instituted any formal mechanism to keep itself informed about the health of the US-64 scheme."

"Autonomy in day-to-day management of UTI cannot absolve the ministry of its statutory responsibilities and accountability to Parliament," the report said.