php3.ini as follows

safe_mode=1
safe_mode_exec_string=/www/sites/mysite/cgi-bin
doc_root=/www/sites/mysite
open_basedir=/www/sites/mysite
extension=pgsql.so  

test.php3
<?php

copy("/etc/passwd","passwd");  /* this works */
$fd=fopen("passwd","r");           /* so does this */
fclose($fd);                             /* and this */

$fd=fopen("/etc/passwd","r");  /* this does is not successful */
fclose($fd);                           /* as it should not be */

?>    

So the system will allow me to copy the passwd file to a local allowd directory and then open it which bypasses the fact that I have restricted the system with open_basedir directive.

thanks