Investors having trouble with redeeming their units in Unit Trust of India’s (UTI) schemes may soon find things a little easier. Last week, following a complaint forwarded by us, UTI sacked a temporary staffer and launched an investigation into what seems like a racket of delayed services that could involve other UTI officials.
The problem was exposed when an investment banker received the usual UTI offer in May this year. The offer was to convert 1,000 units of the CGGF 86 scheme into 935 bonds. He was issued no bonds until July, even as he had submitted the requisite forms. When he called the UTI Investor Services, he was given a mobile phone number and asked to speak to one Ajit.
The person who answered the call made an interesting proposition. He said it would take two months to get his bonds through official channels and just two days if he went through him and his partner in UTI.
Shocked at the revelation, the UTI management is conducting further investigations. However, UTI does offer the services of its subsidiary, UTI Securities, for those investors who, having opted for bonds, have changed their minds and want cash instead.
Other investors who have received similar propositions could take it up with UTI or write to us.
Change of auditors
Global Trust Bank (GTB) has, at various times, been scrutinised by at least six different statutory or special auditors. These include PriceWaterhouse, Ernst & Young, M. Bhaskar Rao & Co., Lovelock and Lewes and Bhuchar & Chandak. Why then did the Reserve Bank of India (RBI) choose the firm of M.P. Chitale for the special audit after GTB was placed under moratorium? And, why did Chitale refuse?
It is not because, as the Investor Grievances Forum (IGF) claims, Rajendra Chitale, managing partner of the firm, was on the board of Unit Trust of India (UTI).
In fact, the RBI may have actually dug up the long buried audit report of 1999-2000 (including the confidential notes) and discovered that M.P. Chitale was in fact the auditor of GTB that year. Not only that, the RBI inspection report makes some extremely negative remarks about the role of the audit firm.
In fact, it said, among other things, ‘‘there was no transparency of the observations of auditors on the affairs of the bank, particularly the correctness and adequacy of provisions. No divergences in asset classification and provisioning were furnished to the bank by the auditors in writing’’.
The inspection report specifically mentioned that the bank’s proposal to reappoint the auditor ‘‘needs to be examined in the light of the above’’. Soon after, the firm stopped auditing GTB. The irony is that the RBI was out to blame PriceWaterhouse which issued a highly qualified audit report for failing to detect the irregularities earlier. In fact, the RBI, which conducts an annual inspection of bank, must be asked why all these inspections, and at least six audit reports, did nothing to improve GTB’s balance sheet or its corporate governance.
It’s money, honey
Ernst & Young (E&Y) has almost ended what remained of the Arthur Andersen Worldwide legacy and believes that EY India will remain unaffected, but it plays coy about the ‘unresolved differences’ over ‘the implementation of certain commitments made by them’ at the time they joined E&Y. That makes it sound like the outgoing partners failed to meet commitments. Why then was E&Y working so hard to keep them back?
Knowledgeable sources say that the problem was actually over money. In fact around Rs 30 crore that belonged to the Andersen Worldwide partners and was to be returned to them. The sum was put in an HDFC Bank account at the time of the merger with the Andersen partners probably as signatories. E&Y Global is understood to have appropriated these profits leading to a huge fracas that saw several Andersen partners leave the firm.
While citizens’ groups and NGOs may rant about the growing menace of passenger cars hogging road space while high-quality public transport remains badly neglected, there is probably a convoluted reason why this happens.
The government earns hefty taxes on each litre of petrol and diesel sold, and uses a part of it to build infrastructure. As much as half the retail price of petrol comprises Central and State government taxes. And projects such as the Golden Quadrilateral, the flyovers in Mumbai and certain bridges depend on increasing petrol consumption for their finance.
Several years ago, in the midst of the flare-up in anti-tobacco activism, the spokesperson of a tobacco giant in the US had made this eye-opening point. He said if the government was really against the tobacco industry, it must ban the manufacture of tobacco products rather than its advertising.
But since it is one of the most heavily-taxed industries in the world, no government wants to lose money. So there is a lot of public posturing but little action.