Bailout hope flickers for US-64 investors
Allies and alarm force Jaya to free Karunanidhi
Games Govindacharya plays
Pervez and Atal switch on charm
Calcutta Weather

New Delhi, July 4: 
The government today raised the glimmer of an escape hatch for small investors in US-64 � the flagship fund of crisis-ridden Unit Trust of India � even as the finance ministry accepted the resignation of P.S. Subramanyam and appointed K.G. Vassal as the acting chairman of the country�s largest mutual fund.

At a meeting with the entire top brass of UTI in the capital, finance ministry officials asked the mutual fund to work out a feasible bailout plan, including a partial opening of US-64 redemption window for small investors.

�Our first priority is to work out a scheme that will provide liquidity to small investors in US-64,� Vassal said. �We will come back to the finance minister with the details which will be placed before the UTI board for approval.�

Vassal said the finance minister had given him two weeks� time to come out with his recommendations.

If approved, the plan will enable selective repurchase of US-64 units from small investors at a price close to the �real� net asset value of the units.

UTI has not been calculating its net asset value on a regular basis. Instead, it has bought back units at arbitrarily fixed re-purchase prices, which were usually higher than what stock market analysts believed were its real value. �This kind of high pricing, which does not reflect real value, will be avoided,� officials said.

The finance ministry also ordered the replacement of M.M. Kapoor, the executive director in charge of the US-64 scheme. Sources said B.S. Pandit, another executive director, had been asked to take charge of the fund.

Insiders said a few more heads are expected to roll in UTI. Portfolios of UTI�s top brass are also expected to the shuffled.

�I have put in my papers in the long-term interest of the organisation,� Subramanyam told The Telegraph. �I thank the government for the two-and-a-half years of stay at UTI. I wish UTI well,� he added.

The bailout package is being worked out under pressure from the Prime Minister�s Office which is concerned about the political fallout of the suspension of US-64.

However, the partial redemption plan will not be extended to corporates, said finance ministry officials, �as heavy redemptions by them could upset the applecart�.

The government has indicated that it will also initiate a �fact-finding� exercise into the UTI affair especially as there is a fear that the joint parliamentary committee headed by S.M. Tripathi, which is now investigating the stock market crash, might take note of the UTI results and link them to its own investigations.

Sources said Subramanyam is likely to be questioned closely on the reasons for his decisions relating to US-64.

Finance ministry officials also privately admitted that the UTI debacle was closely linked to the fact that it had been scooping up stocks favoured by bull operators which later crashed when the bears overran the Bombay Stock Exchange in March.

Minister of state for finance Balasaheb Vikhe Patil said �the government may think of restructuring UTI. All over the world mutual funds are private companies�. He, however, hastened to add that this was his personal belief. �I personally think slowly it should be in the private system. Various kinds of options are under discussion,� he added.

UTI, which controls some 65 per cent of all funds under management in the mutual fund industry, has for long ridden high on its US-64 scheme, which has been the third most popular investment avenue for investors after bank deposits and gold.

But the scheme has lost much of its lustre after fund managers went in for several controversial buys at high prices. Even today the scheme accounts for roughly a quarter of all UTI schemes bought or sold.

Investors had started sensing trouble in US-64 and rushed to sell their units to the mutual during April and May this year. UTI had to buy back units worth about Rs 4,151 crore as a result.

The giant mutual had been trying to restructure its US-64 scheme long before the crisis erupted. It had whittled its holdings in the battered software sector from 21.7 per cent to 7.4 per cent while increasing its exposure to the IT hardware, pharmaceuticals, FMCG and petrochemical sectors.


Chennai, July 4: 
DMK chief M. Karunanidhi was set free today, five days after the Jayalalitha administration packed him off to jail on corruption charges.

He was released on humanitarian grounds, but the case against him remains. Karunanidhi�s son, Stalin, continues to be in jail as he refused to seek bail in court today.

The decision to release Karunanidhi is a surrender by chief minister Jayalalitha to the forces that brought tremendous pressure on her.

Not only was the Centre angry with her, her allies � the Congress, the Left, the PMK, whose leader Ramadoss met Karunanidhi in jail yesterday, and the Tamil Maanila Congress � also advised her to release the 78-year-old former chief minister.

Immediately after his release, Karunanidhi drove to his home in Gopalapuram in Chennai, phoned Prime Minister A.B. Vajpayee and signalled that the DMK was easing the pressure for now. �I have told Vajpayee that I am satisfied with the Central warning,� he said.

Asked if the Central warning was serious enough for Jayalalitha to take action against the �guilty� police officers, Karunanidhi said: �If they do not take action against the police officers concerned, they will face the consequences. If they refuse to take action and the Centre keeps quiet, there is no need for a Central government.�

On President�s rule, Karunanidhi asked reporters to judge if the state was a fit case for its imposition or not.

Murasoli Maran�s statement shortly after he met Karunanidhi this morning � that �the question is whether he (Karunanidhi) will come out of jail alive� � put the fear into the administration. Minutes after Jayalalitha heard of it, she summoned the chief secretary and the police chief and instructed them to release Karunanidhi.

Karunanidhi recounts

I was in bed and suddenly Rajarthi (Ammal, my wife) came to the room, woke me up and said police were here. Even before I could gather my wits, there were so many people in my bedroom.

I was not even given the privacy to wear my clothes, my underwear � there were also policewomen in my room � and some of my relatives held up sheets around me so that I could change.

When I asked the officers what the matter was, they did not tell me but hemmed and hawed. I said I wanted to make a telephone call. I dialled and dialled but the telephone did not work. Then I dialled Maran from a cellphone.

He came soon and asked for the warrant. There were more people in the room and they started pushing and shoving me around. Blows landed on me (pointing to his right shoulder and chest). It is still aching.

I have been arrested several times in the past in public life but this is the first time I was hit and dragged down by the police as if they were playing handball or football. I saw and can still identify the police officers.


New Delhi, July 4: 
The question they are now asking in BJP circles is: where is K.N. Govindacharya? Nobody has a clue.

The former party ideologue went on a two-year sabbatical to distance himself from the Centre�s fast-track economic policies, the BJP�s factional politics and, also, controversies.

But when controversies refused to die down, veteran RSS leader Madan Das Devi �advised� him to �lie low� and not speak to the media for a while, according to BJP sources.

Govindacharya followed the advice to the T and disappeared.

On June 28, though, he wrote a letter to BJP president K. Jana Krishnamurthi from Prayag in Allahabad, saying he would not attend the national executive slated to be held on July 19 and 20 in Amritsar.

But after that, Govindacharya was not found in Allahabad.

In the letter, he mentioned that he would go into �ekantavaas (seclusion)� and observe �maun vrata (complete silence)� for three months. His confidants have no problem with that so long as they know where the leader is.

BJP sources said Uttar Pradesh chief minister Rajnath Singh was asked to discreetly check on his whereabouts with the help of the CID and police. Varanasi MP Shankar Prasad Jaiswal, who had allowed Govindacharya to use part of his official residence as a workplace, said: �I am worried and I have asked the CID of my district to trace him.�

But with the leader away, various stories about Gurumurthy are doing the rounds in the BJP and RSS circles.

One story goes that his confidante and Central minister, Uma Bharti, is in possession of a �letter� which hints at a �relationship� the former BJP general secretary allegedly had with a Ranchi-based woman. The letter was selectively leaked to the Hindi press. But Bharti has denied possessing any such letter.

The second story is more complicated. It again involves Bharti, and also their common friend, S. Gurumurthy.

It is being said that Gurumurthy spoke in derogatory terms about Samajwadi Party spokesman Amar Singh at Bharti�s residence when she was not around. He called Singh a �broker� during an informal chat with reporters.

When Singh got to hear of it, he complained to Bharti. She was furious, and ticked off Gurumurthy for it.

Gurumurthy did not like the scolding and told the whole story to Govindacharya. He, in turn, expressed �shock and disgust� at Bharti�s response and wondered why things had come to such a pass in the Sangh parivar that old friends were turning against one another because of the �compulsions of staying on in power�.

Ever since he ceased to be a BJP office-bearer and was shunted out of the Ashoka Road headquarters, Govindacharya has kept himself aloof from party matters. But he came into his own at a meeting of the Swadeshi Jagran Manch at Shimla in June.


Islamabad, July 4: 
Before the summit comes the charm offensive � from both sides of the border.

President Pervez Musharraf has stepped in to slash red tape and speed up the release of Vikas Singh, an Indian jailed for entering Pakistan without permission during a global peace odyssey on cycle. Singh, who hails from Uttar Pradesh, will be handed over to Indian authorities on the Wagah border tomorrow.

The announcement came on a day Prime Minister Atal Bihari unveiled a string of steps, including seats for Pakistani students in premier Indian institutes, to strengthen ties between peoples of the two countries.

�I have already given instructions and hope that it is done very soon. It could be done any day,� Musharraf had told the Associated Press in an interview yesterday.

Within 24 hours, Singh was released from a prison in the north-western city of Peshawar. An official announcement said he would be transferred to Lahore and from there to Wagah. �The release of Vikas Singh was finalised as a gesture of goodwill after completing all the procedural requirements, but special instructions from the President hastened his release,� an official said.

Vikas, who was on the cycling mission since 1987, had been sentenced to three years in prison in Pakistan. He has been in jail since April 12.

�The issue was brought to the notice of the President by the foreign secretary who had received an appeal by normal mail from Mr Vikas� mother. The President ordered immediate action. The facts of the case were cross-checked with the interior minister and the Indian high commission was informed of the decision immediately,� said the official.

Pakistani officials said Vikas has been freed purely on compassionate grounds. �The fact remains that he did violate the law. He was refused a visa once, but he tried to enter without permission. That could have only landed him in jail,� an official said.

In Lucknow, Vikas� family thanked Musharraf for the gesture. �I am indebted to Gen. Pervez Musharraf for releasing my son and I sincerely pray to God for the success of the Indo-Pak summit which has come as a blessing in disguise for us,� PTI quoted Surendra Singh, father of Vikas, as saying.

No Kargil please

Musharraf told Zee TV that the time has come for India and Pakistan to take bold decisions, adds PTI.

Asked about rebuilding confidence which had suffered a setback after the Kargil conflict, Musharraf said: �We must not live in history. If we talk about Kargil, we will be opening a Pandora�s box.�




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A few spells of light to moderate rain in some parts.
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