The finance ministry has decided to refer 19 audit cases pertaining to investments by the erstwhile Unit Trust of India in companies including Reliance Industries Ltd and Essar Oil to the advisory board for banking, commercial and financial fraud, a pre-investigative body under the Central Vigilance Commission.
In addition, it has asked the Securities and Exchange Board of India to inquire into 89 transactions of the trust.
The decision follows the recommendations of the Tarapore committee, appointed by the finance ministry in 2001, which scrutinised 19 big-ticket investment decisions of the trust in the previous 10 years.
The committee found 18 of them were imprudent and had turned out to be wrong. It pointed out that in one case, though the decision was imprudent, it turned out right.
The Tarapore panel had recommended detailed on-site audit for the 18 wrong investment decisions of the trust.
For Reliance Industries, however, the committee recommended that the case be referred straight to the pre-investigative body.
UTI had cumulative investments of Rs 2,000 crore (Rs 20 billion) in the two Reliance Group companies.
The Tarapore committee recommended initiation of action as per the Prevention of Corruption Act, 1988, in case the investment decisions were found to be influenced by reasons other than commercial interests.
The Advisory Board will now investigate the 19 cases and suggest a course of action.
The issue has been hanging fire for over a year since UTI, under Chairman M Damodaran, received detailed audits on the 19 investment decisions from the firms entrusted with the job. The audit reports were presented to the UTI board, and subsequently discussed by the board with the finance ministry.
Other cases scrutinised by the Tarapore committee included UTI's investment decisions in Global Telesystems, Satyam Computer, Zee Telefilms, Himachal Futuristics, Essar Oil, DSQ Software, Reliance Petroleum Ltd and some other favourite K-10 (Ketan Parekh) companies.
The Central Vigilance Commission had also sent a letter to former Finance Secretary S Narayan to expedite action on the Tarapore panel report.
While the committee had said the Advisory Board could be the pre-investigative body, the possibility of referring the audit cases to the Central Bureau of Investigation was also considered by the government.
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