ICICI Pru accuses former MD Razdan of inappropriate conduct

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In a major development, the board of ICICI Prudential Asset Management Company has shot off a letter to the Securities & Exchange Board of India (Sebi) accusing the company's outgoing managing director and CEO Pankaj Razdan of conduct unbecoming of a senior director and violating the fit and proper norms governing mutual funds. The AMC has alleged that Razdan, even while he was functioning as MD & CEO, had made attempts to lure his staff to join a rival organisation, reports - The Finanical Express.

The AMC's move comes after two enquiries-one internal and one at the board level-found Razdan guilty of such misdemeanours. Prudential of the UK, which holds 50% of the AMC, had intercepted mobile text messages sent by Razdan to his board colleague Ajay Srinivasan, who was a non-executive director on the AMC's board. Srinivasan, who was then an employee of Prudential, has since joined the Aditya Birla Group as chief executive of its financial services business.

When contacted by FE for his version, Razdan first put the call on hold, and then was not reachable until the time of going to press. Sebi officials could not be reached for comment.

Here's how the story goes. On July 18, the chairman of the AMC's board received copies from Prudential of mobile text messages exchanged between Razdan and Srinivasan, which could be viewed as acting against the interest of the company, and indicating improper conduct in carrying out functions of the MD by Razdan.

Some samples of Razdan's alleged text messages seem to indicate his plans. Said one: "Sirjee, few people who hv sacrificed a lot for us n hv refused big job offer shd b taken on priorty as v shd nt allow Reliance to poach ne one from our team. Rgds" Yet another: "Sirjee, almost everyone ready to join across depts... once u join we will hv to move few people initially in sales, ops n service for some quick wins.."

And then again: "Ajay, I had asked ur advice on my product head to resign n join Birla MF now to prepare the roadmap of launches b4 even I m on board...."

And finally: "Thnx sir...very excited. Dnt know how will I pass next few weeks to be on job with you sirjee in nxt 5 years we will create more bigger n profitable institution than ICICI under ur leadership..Rgds." Based on that information, the chairman constituted an internal enquiry committee to examine the issue, meet Razdan and present its findings to the board. The board, at its meeting, examined the findings of the internal committee and expressed the view that they constituted valid grounds for appointment of a committee of the board to further examine the evidence.

The board, upon reviewing the findings, concurred that there was prima facie evidence of inappropriate conduct by Razdan and that his conduct was not in accordance with the fit and proper requirement expected of a director-especially that of managing director.

The board indicated to Razdan that based on the findings of the internal committee and the board-appointed committee, Razdan had, indeed, acted in a manner which resulted in loss of confidence in him and was, therefore, compelled to sever his relationship with the company.

The board informed Razdan that as it had a regulatory obligation to ensure that only a fit and proper person held office as a director, including the position of MD, it would have to inform the relevant regulatory authorities of the background of cessation of his office. The board also reserved ICICI Bank's and Prudential's right to take further action in future.

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