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July 5, 2001
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Money > Business Headlines > Report July 5, 2001 |
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Midnight drama at North BlockBS Bureaus It was 6 pm on Saturday, June 30. The corridors of the finance ministry were deserted. Peons in the ministry were packing up to go home for the weekend. It was on such an evening that the UTI bombshell landed in North Block. The letter was simple. It was addressed to finance secretary Ajit Kumar and informed him of the disastrous performance of the UTI. It further let him know that UTI was planning to freeze sale and repurchase of its flagship, US-64. Because of the weekend, the ministry could not have officially acknowledged receipt of the letter, or intervened in any way, even if it had wanted to. Technically it did not know of Subramanyam's decision which had to be ratified by the board of trustees in any case at its meeting on Monday, July 2. Subramanyam, secure in the knowledge that he had "informed" the government, arrived Monday morning. The board meeting was held at 1200 noon at the conference room of LIC's zonal office. Missing from the board meeting was the SBI chairman. SBI is the only bank on the UTI board. His absence was clearly deliberate, for he attended another meeting called by the finance ministry to review the performance of Debt Recovery Tribunals. The IDBI chairman, S K Chakraborti, who was also required for both meetings excused himself an hour after the DRT meeting started, to attend the UTI meeting. But SBI stayed away owing to 'pressing professional obligations". Subramanyam skipped the Heads of Institutions Meeting held next, which deliberated on the Modi Rubber open offer. Eyebrows were raised because this was a crucial meeting. Instead he held a press conference. He was to return to Bombay the same evening but postponed his departure till Tuesday, July 3. He used the next morning to try to meet the brass in the finance ministry. He waited for an hour but still couldn't meet advisor to the finance minister, Rakesh Mohan. He gave up and returned home. The finance minister was busy in a cabinet meeting on Tamil Nadu. Between 12.00 midnight and 2.00 am, finance ministry officials were in a huddle in North Block with the finance secretary overseeing operations from home. While Ajit Kumar tried to inform UTI board members that the government was letting Subramanyam go, the job of informing Subramanyam was given to another junior officer. Subramanyam was summoned to his office in Bombay during the wee hours of July 4. The finance ministry informed him that he should resign. For the markets, the resignation of P S Subramanyam, chairman of UTI, was neither unexpected nor a surprise. It has been a subject of speculation ever since the stock market scam broke out. The government discussed it six weeks ago, at a meeting of the finance minister, the home minister and the prime minister. At the meeting, it was understood that because of the stated resolve of the government that it would not interfere with the independence of financial institutions, Subramanyam would not be asked to go until there was a case for letting him go. On his part, Subramanyam denied he was under pressure to quit or even that he was contemplating resignation. On April 4, he met finance ministry officials in connection with the stock market scam and later, told reporters he had no plans to quit. UTI Bank's merger with Global Trust Bank was called off on the same day. Still Subramanyam persisted with his stand. On Monday, July 2, when UTI announced its disastrous results, reporters asked Subramanyam how he was continuing in his post, given the fact that he was accountable to investors. His reply was that the freeze on sale and repurchase of US 64 was a board decision and would not adversely affect investors. For the finance ministry the working day since July 3, has been 24 hours. All executive directors of UTI and its new chairman K G Vassal were summoned to Delhi for a meeting with ministry officials. However, significantly, Yashwant Sinha was not present - he was in an adjoining room, holding discussions with his counterpart in the ministry of urban development and bankers on how to kickstart the economy. The distance between UTI and the finance minister had suddenly become vast. Powered by YOU MAY ALSO WANT TO READ:
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