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CBI Chargesheets SBI Fund Managers in 2001 scam

August 30, 2006

CBI has chargesheeted former SBI fund managers for shaking hands with Big Bull turned scamster Ketan Parekh for buying Padmini Technologies Stock from Triumph International by means of off-market purchase. (Greedy promoters had changed the name of Padmini Polymers to Padmini Technologies). The whole scam resulted in a net loss of Rs60 crores to SBI Mutual fund investors.

Ketan Parekh’s Triumph International made a presentation before the SBI MF Investment Committee for a preferential allotment of Padmini Technologies shares. Based on this presentation team member Sonia Sharma prepared a research report which was biased. Sonia didn’t verify the debt and other financial parameters of the Padmini Tech/Polymers. Sonia misused her position and this report formed the basis for all investment decisions.

The investment committee then met to discuss the investment proposal. The offer was rejected by the board headed by then MD Niyamatullah. The Evil, Sandeep Sabharwal filed a fresh notice in favour of accepting the offer allegedly without any proper reason. This time it was accepetd by the board.

CBI alleges that Sabharwal fraudulently approved the proposal for purchase of the shares.It further says that the Former SBI MF Head, Niyamatullah, fraudulently approved the proposal for investment of shares of Padmini Technologies on the basis of a research report and discussion sheet that had been prepared to cause wrongful gains.

Rajat Jain then was CIO and Head of the investment team. The chargesheet alleges that all proposals were routed through Mr. Jain. Ajay Bodke, who at that time was a Fund Manager, also allegedly put up a proposal for purchase of the shares for three different schemes of SBI MF. PR Upadhyay has also been charged with joining the conspiracy. He was the VP at the time and a member of the Investment Committee.

What to do now ?
Business Standard reports that, Sandip Sabharwal now with Lotus AMC has resigned. So one thing is for sure, Lotus hired Sandip without looking into his background. Stanchart and PNB which should have sacked their managers, Ajay Bodke and Rajat Jain, have issued statements that they, are not under pressure to resign. They are scamsters potential scamsters. Investors, how safe is your money in the hands of Stanchart and PNB funds with such shady fund managers managing your hard earned money ??? If I were to make a decision as an investor, I would redeem the schemes that are directly under Ajay Bodke or Rajat Jain.

Concluding Remarks:
I would personally not invest and AVOID all schemes of SBI Mutual Fund(including Magnum fund), PNB Fund and Stanchart Fund until the respective AMCs clean up their house. I would also avoid Lotus AMC.

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