UTI Scam
Content
UTI Scam : Robbery Through other Means
The line between ‘legitimate’ business and the mafia is getting increasingly diffused. The greater the liberalisation/globalisation of the economy, the more rampant is the loot. Phoolan Devi as a dacoit in the ravines of Madhya Pradesh could not even dream of the type of wealth made as a Member of Parliament. er wealth at the time of her death was estimated at a minimum of !s. "# crores. $ut this is small fry compared to the arshad Mehtas, $harat %hahs, &etan Pare'hs, %ubramanyams etc and the top politicians/bureaucrats/corporate houses with whom they are lin'ed. Phoolan Devi appears as a petty thief compared to these gangsters. The amount robbed through the (T) scam intails thousands of crores * the bul' of which belongs to small investors who have put their life+savings into this scheme. What is the UTI ? The (nit Trust of )ndia is the largest mutual fund in the country created in ",-. through an act of parliament. Mutual /unds are financal institutions that invest people’s money in various schemes, giving a ‘gauranteed’ return to the investor. The (T) 0of which the (%+-. scheme is the largest1 was set+up specifically to channel small savings of citi2ens into investments giving relatively large returns/interest. The (%+-. scheme has 3 crore investors, the bul' of whom are small savers, retired people, widows and pensioners. $esides the (%+-. the (T) runs 45other schemes giving inverstors various options. $ut the (%+-. has been most popular, giving returns as high as "46 in ",,7 and ,.. Genisis of the Scam 8iberalisation of the economy immediately led to the liberalisation of the (T), throwing it to the mercy of the stoc' mar'et. )n ",,3, itself the (%+-. scheme was changed from a debt+based fund to one lin'ed to e9uity. )n ",,3 only 346 of its funds was in e9uity: today it is over 5#6. /urther liberalisation was pushed by ;hidambram, as the finance minister of the ( / government, who, in ",,5, removed all government nominees from the board of the (T). $esides, the (%+-. does not come under %<$) regulations, its investment delails are 'ept secret 0ever depositors cannot 'now where their funds are being par'ed1 and the chairman has arbitrary powers to personally decide an investment upto a huge !s .# crores. %uch ‘liberalisation’ is tailor+made for frauds. =ot surprisingly, within one year of ;hidambram’s liberalisation, in ",,4, the (T) crashed, and the new $>P+led government organised a large !s. 7,?## crore bail+out to prevent default. )t was during this crisis that the new chairman, P.%. %ubramanyam, was appointed. %ubramanyam was a direct appointee of thug >ayalalitha, who had made his selection a condition for her continuing the support of the then =D@ government. 8ater, though >ayalalitha withdrew from the government, %ubramanyam developed close lin's with the Prime Minister’s Affice, and corporative big+wigs. %mall investor’s funds were used to promote big business houses, shower favours to politicians, and invest huge amounts in Bun' bonds....all for a fat commission. %ubramanyam functioned li'e a fascist, arbitrarily transferring hundreds of senior staff, in order to cover his trac's. e was a 'ey player in the &etan Pare'h scam. uge amount of (T) funds were channelled into the infamous &+"# list of &eten Pare'h stoc', such as imachal /uturistic, Cee Telefilims, Dlobal Tele, D%E, etc. The (T) continued to buy these shares even when their mar'et value began to crash in mid+3###, in order to prop up the share values of these stoc's. The Trust saw its !s. 7#,### portfolio 0value of stoc's1 lose half its value within a year since /eb. 3###. To ta'e Bust one eFample on how the (T) operated G )n @ugust 3###, much after the software stoc's had begun to crash, the (T) bought !s. 7. crores worth of shares in ;yberspace )nfosys 8td at the huge price of !s ,7# per share. Today the shares have no value and its 8ac'now based promoters, the >ohari Droup, are in Bail. $ut, what is astounding is that it was none other than )ndia’s prime minister,
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HaBpayee, who, as late as >an. 7", 3##", laid the foundation stone for the %oftware Tectnology Par' 0%TP1 in 8u'now, promoted by this group. 0)ncidentally the (P government had a 3-6 share in this %TP1. ;oincidentally, in the four days when the (T) reversed its earlier decision and subscribed to 7..? la'h shares of ;yberspace, %ubramanyam had rung up =.&. %ingh 0then secretary in the PMA1 at least . times. )t does not ta'e much imagination to lin' (T) purchases in ;yberspace with HaBpayee. %imilar were the investments in D%E %oftware, /;8, %riram Multitech. and others. $esides, the (T) also invested in Bun' bonds li'e Pritish =andy communications 0!s. ".? crores1, >ain %tudios0!s.? crores1, %anBay &han’s =umero (no )nternational 0!s. 5.? crores1, Malavi'a %pindles0!s. "44 crores1 etc. This amounted to nothing but handing over people’s money 0investments1 to the rich and powerful. Thereby thousands of crores were siphoned off to big business and prominent individuals, with the (T) chairman, bureaucrats and politicians ta'ing their cuts. $ut this was not all. The fraud continues even further. Iith 'nowledge that the (T) was in a state of collapse, the ;hairman organised a high profile propaganda campaign promoting (T) 0spending crores of rupees on the top advertising company, !ediffusion1, while at the same time lea'ing information to the big corporates to withdraw their funds. The ;hairman thereby duped the la'hs of small investors through false propaganda, while allowing windfall profits to the handfull of big corporates who had invesed in (T). %o, in the two month prior to the free2ing of dealings in (T) shares, a gigantic sum of !s. .,"." crores was redeemed. Af this !s..,### crores 0,561 were corporate investments. Ihat is more,they were re+purched at the price of !s. "..3# per share 0face value !s."#1 when in fact its actual value 0=@H * net asset value1 was not more than !s. 4. @s a result (T)’s small investors lost a further !s. ",7## crores to the big corporates. )n fact these huge withdrawals further precipated the crisis. An >uly ., 3##" the board of (T) too' the unprecedented step of free2ing the purchase and sale of all (%+-. (T) shares for siF months. %imultaneously it declared a pathetic dividend of 56 0"#6 on face+value1, which is even lower than the interests of the ban's and post office saving schemes. %uch free2ing of legally held shares is unheard of * and is li'e overnight declaring !s. "## notes as invalid for some time. )n other words the 3 crore shareholders could not re+invest their money elsewhere * and would have to passively see their share price erode from !s. ". 0at which they would have purchased it1 to !s 4 * and get interest at a mere 56 on their initial investments. /earing a bac'+lash, the government/(T) later announced the ability to repurchase (T) shares at !s. "# * i.e. at 7# 6 below the purchase price. )magine the plight of a retired person who would have put a large part of his/her P/, gratuity etc. in the (%+-. scheme, considering it the safest possible investment. =ot only has the person’s income 0interest/dividend1 halved overnight, he/she also stands to lose a large part of the investment. %o, a person who invested !s. " la'h would now only get bac' !s 5#,###. Today, the entire middle class is being robbed of their savings * first it was by the private mutual funds 0=$/;s1, now by the govt. sponsored mutual fund. Those who gain are the robber barons who run the country’s economics, finance, politics. The middle+classes, affected by these scame, will soon realise the facts and come out of the euphoria of consumerism that has numbed their senses. They will see through the hoaF of globalisation/liberalisation, and will turn their wrath on these so+called pillars of society. )t is important that this impending eFplosion be channeled in a revolutionary direction, or else it will be diverted by the ruling elite into fatricidal clashes. The middle+classes are most prone to fall prey to ruling+class propaganda. $ut life itself is the best educator. /aced with unemployment, loot of their savings, price rise of all essentials, etc. they will no doubt, Boin the wor'ing class and their peasant brethrens in revolt.
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The line between ‘legitimate’ business and the mafia is getting increasingly diffused. The greater the liberalisation/globalisation of the economy, the more rampant is the loot. Phoolan Devi as a dacoit in the ravines of Madhya Pradesh could not even dream of the type of wealth made as a Member of Parliament. er wealth at the time of her death was estimated at a minimum of !s. "# crores. $ut this is small fry compared to the arshad Mehtas, $harat %hahs, &etan Pare'hs, %ubramanyams etc and the top politicians/bureaucrats/corporate houses with whom they are lin'ed. Phoolan Devi appears as a petty thief compared to these gangsters. The amount robbed through the (T) scam intails thousands of crores * the bul' of which belongs to small investors who have put their life+savings into this scheme. What is the UTI ? The (nit Trust of )ndia is the largest mutual fund in the country created in ",-. through an act of parliament. Mutual /unds are financal institutions that invest people’s money in various schemes, giving a ‘gauranteed’ return to the investor. The (T) 0of which the (%+-. scheme is the largest1 was set+up specifically to channel small savings of citi2ens into investments giving relatively large returns/interest. The (%+-. scheme has 3 crore investors, the bul' of whom are small savers, retired people, widows and pensioners. $esides the (%+-. the (T) runs 45other schemes giving inverstors various options. $ut the (%+-. has been most popular, giving returns as high as "46 in ",,7 and ,.. Genisis of the Scam 8iberalisation of the economy immediately led to the liberalisation of the (T), throwing it to the mercy of the stoc' mar'et. )n ",,3, itself the (%+-. scheme was changed from a debt+based fund to one lin'ed to e9uity. )n ",,3 only 346 of its funds was in e9uity: today it is over 5#6. /urther liberalisation was pushed by ;hidambram, as the finance minister of the ( / government, who, in ",,5, removed all government nominees from the board of the (T). $esides, the (%+-. does not come under %<$) regulations, its investment delails are 'ept secret 0ever depositors cannot 'now where their funds are being par'ed1 and the chairman has arbitrary powers to personally decide an investment upto a huge !s .# crores. %uch ‘liberalisation’ is tailor+made for frauds. =ot surprisingly, within one year of ;hidambram’s liberalisation, in ",,4, the (T) crashed, and the new $>P+led government organised a large !s. 7,?## crore bail+out to prevent default. )t was during this crisis that the new chairman, P.%. %ubramanyam, was appointed. %ubramanyam was a direct appointee of thug >ayalalitha, who had made his selection a condition for her continuing the support of the then =D@ government. 8ater, though >ayalalitha withdrew from the government, %ubramanyam developed close lin's with the Prime Minister’s Affice, and corporative big+wigs. %mall investor’s funds were used to promote big business houses, shower favours to politicians, and invest huge amounts in Bun' bonds....all for a fat commission. %ubramanyam functioned li'e a fascist, arbitrarily transferring hundreds of senior staff, in order to cover his trac's. e was a 'ey player in the &etan Pare'h scam. uge amount of (T) funds were channelled into the infamous &+"# list of &eten Pare'h stoc', such as imachal /uturistic, Cee Telefilims, Dlobal Tele, D%E, etc. The (T) continued to buy these shares even when their mar'et value began to crash in mid+3###, in order to prop up the share values of these stoc's. The Trust saw its !s. 7#,### portfolio 0value of stoc's1 lose half its value within a year since /eb. 3###. To ta'e Bust one eFample on how the (T) operated G )n @ugust 3###, much after the software stoc's had begun to crash, the (T) bought !s. 7. crores worth of shares in ;yberspace )nfosys 8td at the huge price of !s ,7# per share. Today the shares have no value and its 8ac'now based promoters, the >ohari Droup, are in Bail. $ut, what is astounding is that it was none other than )ndia’s prime minister,
1
HaBpayee, who, as late as >an. 7", 3##", laid the foundation stone for the %oftware Tectnology Par' 0%TP1 in 8u'now, promoted by this group. 0)ncidentally the (P government had a 3-6 share in this %TP1. ;oincidentally, in the four days when the (T) reversed its earlier decision and subscribed to 7..? la'h shares of ;yberspace, %ubramanyam had rung up =.&. %ingh 0then secretary in the PMA1 at least . times. )t does not ta'e much imagination to lin' (T) purchases in ;yberspace with HaBpayee. %imilar were the investments in D%E %oftware, /;8, %riram Multitech. and others. $esides, the (T) also invested in Bun' bonds li'e Pritish =andy communications 0!s. ".? crores1, >ain %tudios0!s.? crores1, %anBay &han’s =umero (no )nternational 0!s. 5.? crores1, Malavi'a %pindles0!s. "44 crores1 etc. This amounted to nothing but handing over people’s money 0investments1 to the rich and powerful. Thereby thousands of crores were siphoned off to big business and prominent individuals, with the (T) chairman, bureaucrats and politicians ta'ing their cuts. $ut this was not all. The fraud continues even further. Iith 'nowledge that the (T) was in a state of collapse, the ;hairman organised a high profile propaganda campaign promoting (T) 0spending crores of rupees on the top advertising company, !ediffusion1, while at the same time lea'ing information to the big corporates to withdraw their funds. The ;hairman thereby duped the la'hs of small investors through false propaganda, while allowing windfall profits to the handfull of big corporates who had invesed in (T). %o, in the two month prior to the free2ing of dealings in (T) shares, a gigantic sum of !s. .,"." crores was redeemed. Af this !s..,### crores 0,561 were corporate investments. Ihat is more,they were re+purched at the price of !s. "..3# per share 0face value !s."#1 when in fact its actual value 0=@H * net asset value1 was not more than !s. 4. @s a result (T)’s small investors lost a further !s. ",7## crores to the big corporates. )n fact these huge withdrawals further precipated the crisis. An >uly ., 3##" the board of (T) too' the unprecedented step of free2ing the purchase and sale of all (%+-. (T) shares for siF months. %imultaneously it declared a pathetic dividend of 56 0"#6 on face+value1, which is even lower than the interests of the ban's and post office saving schemes. %uch free2ing of legally held shares is unheard of * and is li'e overnight declaring !s. "## notes as invalid for some time. )n other words the 3 crore shareholders could not re+invest their money elsewhere * and would have to passively see their share price erode from !s. ". 0at which they would have purchased it1 to !s 4 * and get interest at a mere 56 on their initial investments. /earing a bac'+lash, the government/(T) later announced the ability to repurchase (T) shares at !s. "# * i.e. at 7# 6 below the purchase price. )magine the plight of a retired person who would have put a large part of his/her P/, gratuity etc. in the (%+-. scheme, considering it the safest possible investment. =ot only has the person’s income 0interest/dividend1 halved overnight, he/she also stands to lose a large part of the investment. %o, a person who invested !s. " la'h would now only get bac' !s 5#,###. Today, the entire middle class is being robbed of their savings * first it was by the private mutual funds 0=$/;s1, now by the govt. sponsored mutual fund. Those who gain are the robber barons who run the country’s economics, finance, politics. The middle+classes, affected by these scame, will soon realise the facts and come out of the euphoria of consumerism that has numbed their senses. They will see through the hoaF of globalisation/liberalisation, and will turn their wrath on these so+called pillars of society. )t is important that this impending eFplosion be channeled in a revolutionary direction, or else it will be diverted by the ruling elite into fatricidal clashes. The middle+classes are most prone to fall prey to ruling+class propaganda. $ut life itself is the best educator. /aced with unemployment, loot of their savings, price rise of all essentials, etc. they will no doubt, Boin the wor'ing class and their peasant brethrens in revolt.
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