Corrective Measures In Place, Assure Pru-ICICI Trustees

Mumbai, April 14 | Updated: Apr 15 2004, 05:30am hrs
The switching scam at Prudential ICICI Asset Manag-ement Company appears to have rattled the directors of the trustee company as well. While the trustee company reiterates the AMC view saying that there has been a violation of norms, the directors assure that adequate preventive measures have been put in place to minimise risks in future.

Speaking on behalf of the board of directors of the trustee company of the AMC, Vishnu B Haribhakti, a director on the board of trustees of Prudential ICICI AMC said: There has been a problem at the Kanpur branch of the AMC, but the headquarters in Mumbai has done its bit to ensure that no client has to suffer any financial losses. The AMC headquarters has also carried out its duty by informing us meaning the board of directors of the trustee company as well as Sebi immediately after the discovery of the irregularity.

Mr Haribhakti said the trustees, together with the AMC had taken all corrective measures immediately after the scam was detected, by asking the official concerned to leave. We have also ensured that the internal systems, meaning audits and other checks and balances, are re-strengthened to full capacity. Although nobody can ensure that there will not be any other lapse ever again, we are convinced about the capabilities of the AMC officials and are sure that they have taken ample measures to minimise risks in future, he added.

When asked whether the headquarters can steer clear of the blame, as the systems of clearance for any switch request ought to be centralised, Mr Haribhakti said: To the best of my knowledge, there was no involvement of the headquarters in the scam. Although there is some centralised software in place that tracks the inflows and outflows of every scheme, it is impossible for the headquarters to track any error that has been engineered earlier by the branch office.

I do not think it would be appropriate to blame the headquarters, as this was a violation of PF norms by the Kanpur official in charge of operations. Thus, the branch manager, once he was caught, was sacked without any further delay, Mr Haribhakti emphasised.

Another trustee who did not wish to be named, when contacted by FE, said Pankaj Razdan, MD of Pru-ICICI AMC, had already spoken on behalf of the directors on his version of the scam.

Since the concerned client has not lost a single rupee, the board of trustees cannot be made responsible for the lapse, he added.

Enough checks and balances have been put in place to minimise any further risks, he concluded.