Probe panel for UTI investments likely

The finance ministry is planning to set up a separate investigative body to scrutinise questionable investments made by the Unit Trust of India.

Senior government officials told Business Standard the only issue that needed to be sorted out was which ministry would have administrative charge of the new set-up.

"It is, however, clear that the finance ministry will not get into investigation," an official pointed out.

All kinds of fraud -- administrative, criminal and regulatory -- would be looked into by the new investigator, which would comprise experts, including auditors and financial specialists, the officials said.

The finance ministry would move against those indulging in administrative fraud, the Securities and Exchange Board of India would proceed against regulatory fraud and the Central Bureau of Investigation would move against criminal offences, they explained.

According to the officials, several bodies, including the Central Vigilance Commission, the joint parliamentary committee probing the 2001 stock scam and the Tarapore committee had made different observations on the UTI affair.

The JPC had recommended that Sebi investigate the investment decisions of the UTI, the Tarapore committee said audit be undertaken in respect of 18 companies before referring it to a pre-investigative body and the CVC directed the finance ministry that companies for which audit had been undertaken be referred directly to the CBI.

The latest move of the government will, however, put the onus of determining the culpability for bad investment decisions by the UTI on the new investigative organisation.

It will also render redundant all earlier efforts of various agencies, though their reports will form an important input for the work of the new set-up.

The officials said while the Tarapore committee had studied 19 companies, there were several more which needed to be scrutinised in greater detail.

The finance ministry had found it difficult to move forward on the various recommendations because of their conflicting nature. The investigative body would scrutinise UTI's investments in 85-90 companies, the officials added.