Most trusted mutual fund drops bombshell on US-64 investors
Coalition hands sack-gun to Cabinet
No-bail battle in jail
Wrong immunity theory, Mr Jaitley
Buddha double blow to Subhas
Calcutta Weather

 
 
MOST TRUSTED MUTUAL FUND DROPS BOMBSHELL ON US-64 INVESTORS 
 
 
FROM OUR SPECIAL CORRESPONDENT
 
New Delhi, July 2: 
Unit Trust of India, the country’s largest mutual fund, today stunned markets and over two lakh investors in US-64 — its popular flagship fund — by suspending sale and repurchase of units for six months starting tomorrow.

The 37-year-old fund, which has always been considered a safe-house investment, also pared dividends to Re 1 per unit (or 10 per cent) from last year’s payout of 13.75 per cent.

“The decision has been taken to enable us to restructure the fund,” said Unit Trust chairman P.S. Subramanyam. “The units of the scheme can, however, be traded on the market.”

The finance ministry said it has noted the US-64 results and review brought out by UTI. The ministry said it would look into all aspects of the poor performance and suspension of the scheme and take appropriate measures if necessary. However, a ministry spokesperson refused to elaborate what these “appropriate measures” might be. Ministry officials said the UTI board is likely to be restructured shortly and this might well go against the current chairman and other senior officials.

“The year 2000-01 has been very turbulent for all economies and markets, including India. Under the circumstances, the restructuring of the US-64 portfolio would necessarily call for time,” the UTI chairman said, defending the suspension decision.

Stock market analysts feel the market is likely to react negatively to the news and the sensex is expected to plunge in the days ahead. UTI is one of the biggest investors in the stock market and a weakness in its fortunes has a knock-on effect on the market.

UTI, which manages 65 per cent of the assets of the entire mutual funds industry, has been in trouble since September 1998 when it first shocked the nation with the news that its reserves had turned negative. The trust was forced to restructure its US-64 fund portfolio by weeding out a long list of public sector stocks.

After a bailout plan was drawn up in 1999, it focused on a number of technology stocks, which paid off in the beginning. But after the worldwide meltdown in software and technology stocks in the middle of 2000, the mammoth mutual fund was in deep trouble once again. There was a rush to sell US-64 units to the mutual fund during April and May this year.

UTI had been trying to restructure its US-64 scheme ahead of the current debacle. It had reduced its exposure to the software sector from 21.7 per cent to 7.4 per cent and telecom stocks from 9 per cent to 3.4 per cent.

Subramanyam said all this helped improve performance somewhat with a net income of Rs 1,523.8 crore or an income of Rs 1.19 on each unit of Rs 10. But this did not translate into high profitability.

The UTI chief also announced today that the face value of its 95 and UTI G-Sec schemes was being split from Rs 100 to Rs 10 while an income distribution option was being introduced for its UTI Money Market Mutual Fund and UTI Bond Fund schemes.

Also announced were dividend for five other schemes — GUP at 0.90 per cent or 90 paise, US 95 at Rs 13.5, SCUP at 90 paise, RBUP at Re 1 and CRTS at Rs 9 or 9 per cent on a unit of Rs 100. UTI plans to launch an open-ended monthly income plan, an exchange traded fund and an innovative equity product that may offer investors an opportunity to enter and exit equity schemes profitably.

Mutual fund circles in Mumbai said it was likely that some investors could move court, challenging UTI’s decision. “They may consider legal avenues to wrest their right to sell their units,” said an analyst.

   

 
 
COALITION HANDS SACK-GUN TO CABINET 
 
 
FROM RADHIKA RAMASESHAN
 
New Delhi, July 2: 
Apparently dissatisfied with the recall of Tamil Nadu Governor Fathima Beevi, the National Democratic Alliance tonight recommended the dismissal of the Jayalalitha government and the imposition of Central rule. A meeting of the NDA, chaired by Prime Minister Atal Bihari Vajpayee, concluded that Tamil Nadu was a fit case for the use of Article 356.

The ruling coalition also felt that the release of the two DMK Central ministers, Murasoli Maran and T.R. Baalu, was not enough. NDA sources said the Centre expected Jayalalitha to carry out three other tasks simultaneously: explain why the Cabinet ministers were arrested in the first place, withdraw the charges against them and punish the officials who had allegedly committed the “atrocities” against them.

A PTI report said attorney-general Soli Sorabjee, who is in London, has been asked by the Prime Minister to cut short his visit and attend tomorrow’s Cabinet meeting on the situation in Tamil Nadu.

The focus of tonight’s meeting was on the arrests of Maran and Baalu, and not on the crackdown on former chief minister M. Karunanidhi, indicating that it was the “affront” to the Centre’s authority from a regional satrap that had unsettled the NDA more than Jayalalitha’s attempts to settle scores with her predecessor.

Stressing that Maran’s arrest was the “central issue” at stake — copies of the commerce minister’s faxed account detailing his experience on Saturday were distributed to the media — a statement signed by NDA convener George Fernandes, who had led a delegation to Chennai yesterday, said: “We believe that by arresting two members of the Union Cabinet, the chief minister of Tamil Nadu has opened the doors of anarchy as no one person or political party has done since Independence. If these are not shut immediately, the country may have to face an unprecedented assault on its unity and integrity.”

“This is what makes us see justification and strength in the demand of these parties,” Fernandes said, referring to his meeting with political leaders in Chennai. “They told us very strongly that with the breakdown of the Constitution in the state, the Union government should invoke Article 356.”

However, government sources said, a note of caution was expressed by BJP MP V.K. Malhotra, who was also part of the NDA delegation. Apparently he said the “ground realities” would have to be considered before a “drastic action” is contemplated.

Bending over backwards to pave the way for her re-entry into the Central coalition, Mamata Banerjee said she would support the government if it clamped Article 356 on Tamil Nadu.

Sources said the Cabinet, which is scheduled to meet at 6.30 pm tomorrow after the return of home minister L.K. Advani from abroad, is expected to make a detailed appraisal of today’s NDA-called bandh in Tamil Nadu and see if it had the kind of impact they had expected.

But a view is gaining ground within the BJP and the NDA that with Jayalalitha openly taking on the Centre, dismissing her government is the only way to “fix” her. Beevi’s recall, sources said, had swivelled the spotlight on the alleged acts of omission and commission by the Governor.

This section is baying for the ADMK’s blood and is willing to overlook the fact that the NDA lacks the numbers in the Rajya Sabha to ratify President’s rule. “We can wait for two months to seek its ratification. By that time, the new Governor can swear in a person other than Jayalalitha. After that, we will see how the government functions minus the lady,” a senior BJP minister said.

Today’s NDA meeting condemned Jayalalitha’s attempts to implicate Karunanidhi in the flyover scam. “The diabolical manner in which the chief minister has subverted the Constitution and made mockery of the rule of law to fix Dr Karunanidhi becomes obvious from the way the complaint on the basis of which Dr Karunanidhi was arrested was cooked up,” the statement said.

   

 
 
NO-BAIL BATTLE IN JAIL 
 
 
FROM SUJAN DUTTA
 
Chennai, July 2: 
Tamil Nadu chief minister Jayalalitha today ordered police to seek the release of Union ministers Murasoli Maran and T.R. Baalu but the climbdown by the state administration does not mean that the crisis has blown over.

Maran and Baalu refused to sign an undertaking stating that they will be available for interrogation and further investigation and, technically, have refused to be released on bail. They have demanded withdrawal of the cases against them.

The Union ministers were held on charges of obstructing the police from performing duties when former chief minister M. Karunanidhi was arrested.

At five this evening, director-general of police A. Ravindranath sent instructions for the release of the two ministers. Maran is under arrest at Apollo Hospitals and Baalu in custody at Vellore jail. When the police reported to the headquarters that the ministers were refusing bail and wanted the cases dropped, the police brass went into a huddle and desperately tried to contact Jayalalitha who is on a pilgrimage to Kerala.

Jayalalitha’s orders to the police to release the ministers came after the NDA team led by George Fernandes recommended stern action against the government.

State administration sources said the chief minister’s move to release the two ministers was an attempt to pre-empt the possibility of the Centre sending a directive under Article 355.

However, their refusal to accept bail means that the DMK ministers, having rallied all NDA partners to the aid of the party, are precipitating a fresh crisis.

Indications from the DMK camp are that Karunanidhi, too, could take a similar course of action tomorrow when the court can consider a bail application. “What bail? We have not applied for any bail,” said S. Kuppuswamy, DMK MP. But Karunanidhi’s son-in-law, Aravindam, said lawyers had met the former chief minister in his cell at the Chennai Central Jail this afternoon to prepare to secure his release in court tomorrow.

Earlier today, it was clear that Jayalalitha was keen to wind down the tension. She sent a delegation of her ministers to Delhi who told Union law minister Arun Jaitley that Maran and Baalu will be released today. Clearly, the DMK does not want Jayalalitha to withdraw from a fight on her terms.

The hard line taken by the DMK is being interpreted as its resolve to push through its demand for President’s rule, though the party will find it hard to justify a decision to dismiss a government with a brute majority in the Assembly. “We have requested the Prime Minister to invoke Article 356,” DMK general secretary K. Anbazhagan told The Telegraph. But asked categorically if the party was threatening to pull out of the NDA if its demand was not granted, he said: “We are not thinking on those lines.” However, with Karunanidhi in jail, no other leader can have the last word.

   

 
 
WRONG IMMUNITY THEORY, MR JAITLEY 
 
 
BY CHO RAMASWAMY
 
Chennai, July 2: 
I view the developments over the weekend this way: First, there is the legality of it, then the propriety.

Legally, nobody is immune from the law. The former chief minister is as much answerable to law as anyone else. But as far as the arrest is concerned, I do not know how far it was necessitated.

It is usual practice to arrest only if it will facilitate the investigation. The Government of Tamil Nadu should have filed charges against him and taken the matter to court and arrest him only if necessary. At the very least, the police should have gone with a warrant. Obviously, Jayalalitha was in a great hurry.

Midnight arrests are effected when politicians are concerned because otherwise they could lead to law and order problems. Where Mr Karunanidhi was concerned, Sun TV’s clippings made it appear that the police manhandled the ex-chief minister. This has naturally made people very angry, but I do not know how far it is possible to judge what had happened over two-and-a-half-hours in a two-and-a-half-minute clipping.

The video footage released by the police shows that Karunanidhi was actually cooperative, just as people of his age and experience are likely to be. It was Murasoli Maran’s intervention and his assault on the police that turned the situation. Not only that, it was only after Maran’s intervention that people of the household tried to resist the arrest. The police, I think, did drag Karunanidhi but then, they had to release him from the grip of his relatives and servants. So, Maran’s intervention and obstruction necessitated the use of minimal force.

It would have been much wiser, better and saner if the state government had approached the court. But again, all these unsavoury happenings would not have taken place if Maran was not an obstruction.

As far as the arrest of the two Union ministers are concerned — and they not only obstructed but also assaulted — I do not buy the argument of Arun Jaitley that state police cannot enter Union ministers’ residences. The residences of Union ministers are not islands of immunity.

The BJP president, Jana Krishnamurthi, has questioned the right of any state police to arrest a Union minister. This would mean that Union ministers who are transgressing the law cannot be arrested anywhere in India.

And Mr Arun Jaitley says this violates the Constitution! I am not aware of any constitutional provision which prevents the state police from acting against Union ministers if they violate the law.

The use of Article 356 is being bandied about. I do not see how the constitutional machinery in this state has broken down. The BJP in its anxiety to please its ally, the DMK, should not go to the extent of misusing Article 356. Since they do not have the necessary numbers in the Rajya Sabha, President’s rule will lapse almost immediately if it is imposed.

But the BJP may perhaps feel that after President’s rule lapses, the Assembly will have to elect a new chief minister again and the new Governor could be instructed not to swear-in Jayalalitha even if she is elected by the ADMK members. I do not know if this is the plan. If they do it, it will be a blot in their copybook.

Jayalalitha was in a hurry to wreak vengeance, the two Union ministers committed the crime of assaulting the police and the Centre has over-reacted. None of them comes out unscathed.

Cho Ramaswamy, editor of Thuglaq, is a Tamil satirist and commentator.

   

 
 
BUDDHA DOUBLE BLOW TO SUBHAS 
 
 
OUR BUREAU
 
Calcutta, July 2: 
Pressure began building up on Subhas Chakraborty from within the government today as chief minister Buddhadeb Bhattacharjee ordered a CID inquiry into the stadium scandal and sought a report from the embattled sports minister.

After convincing the CPM leadership of the need for a hard line and neutralising Chakraborty’s mentor, Jyoti Basu, Bhattacharjee announced the twin decisions in Assembly.

Bhattacharjee acknowledged that 16 persons were rounded up after a raid inside the Salt Lake Stadium hostel — Chakraborty’s fief — on June 26. Four were arrested later and arms and ammunition seized from them, he added. The rest were released after body search.

Ignoring Chakraborty’s claim that he was framed by a section of police and the CPM, the chief minister told the Assembly: “I am not satisfied with the progress of the investigation so far and, considering the gravity of the crime, I have decided to entrust the CID with the inquiry.... I have directed the minister concerned (Chakraborty) to submit a report on it.”

“The register of the youth hostel was checked and there was no record of the arrested criminals. I have sought a report from the minister concerned on how criminals got shelter in the stadium hostel,’’ Bhattacharjee said, adding that Tapash Ghosh Dastidar (a CPM functionary and close associate of Chakraborty’s) was arrested on Sunday. Chakraborty told reporters in the Assembly lobby that he had no comments on why the chief minister was unhappy with the progress of the inquiry.

“It is not my duty to know how the chief minister will be satisfied. But I am 200 per cent satisfied with his statement and I will submit my report to him as directed. I am sorry I cannot accept the Opposition’s demand and resign because I was made a minister neither by the Opposition nor the media,” Chakraborty added.

Unlike Chakraborty, who sat through the chief minister’s statement impassively, Trinamul Congress legislators jumped into the well and raised slogans. Some rushed towards the Speaker’s podium, Bhattacharjee and Chakraborty, and a scuffle broke out when the security squad tried to prevent them.

Bhattacharjee, who was interrupted several times, was eventually asked by the Speaker to lay the statement in the House and it was taken as read.

Trinamul and the Congress walked out, demanding a CBI investigation citing the Left’s appeal for a such a probe into the Tehelka expose. Trinamul moved a no-confidence motion against the Speaker for disallowing a discussion on the chief minister’s statement.

Outside the Assembly, across Calcutta and Howrah, Trinamul and Congress supporters squatted on railway tracks, blocked roads and disrupted traffic, demanding Chakraborty’s resignation.

Trinamul chief Mamata Banerjee later said an inquiry by the CID meant the government was trying to hush up the incident. “The CID is nothing but the government’s chhoto bhai. They will come in only to suppress facts,” she said, claiming that “Gabbar, another dreaded criminal, was also in the stadium along with Palash, but the police let them disappear”.

A hunt is now on for Gobinda Dey, another associate of Chakraborty, and Palash Das, who hails from Howrah.

   

 
 
CALCUTTA WEATHER 
 
 
 
 

Temperature

Maximum: 28.8°C (-4)
Minimum: 24.6°C (-1)

Rainfall

6.8 mm

Relative Humidity

Max: 98%
Min: 87%

Today

A few spells of light rain with one or two heavy showers.
Sunrise: 4.59 am
Sunset: 6.22 pm
   
 

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