|UTI board battles finmin over new chief|
|Saturday, 09 April 2011 00:00|
Sunil Jain and Subhomoy Bhattacharjee
The search for a successor for UK Sinha at UTI AMC has got messy with the finance ministry backing Jitesh Khosla (IAS, 1979 batch) as the CEO of India’s fourth largest mutual fund while a three-member board-appointed HR sub-committee has submitted a shortlist that has two different names.
If the finance ministry insists on its choice, the stage is set for a boardroom battle since the new chairperson has to be unanimously cleared by all shareholders of UTI AMC. These include State Bank of India, Punjab National Bank, LIC, Bank of Baroda and US firm T Rowe Price that was inducted with a 26% stake in the company in January 2010. The others hold 18.5% each.
Some board members have already conveyed their reservations to the finance ministry. Meanwhile, UTI AMC employees met the HR chief this week to express their concern about the fact that the organisation was headless since Sinha left in February to become the chief of the Securities and Exchange Board of India. The HR chief is believed to have told them that while a shortlist of two candidates has been drawn up, the board would prefer a person who has the finance ministry’s approval. While UTI AMC is a private sector company by its constitution, it still retains an informal relationship with the government and its CEO has, therefore, been decided by the ministry till now.
It was to break this connection that investors suggested a new approach to select the chief of the organisation in line with global best practices. The board constituted a three-member search committee which, in turn, left the search to manpower consultants Egon Zehnder International — Egon was the search firm used to find the head for Axis Bank which is owned by UTI.
Egon, in turn, interviewed close to 30 candidates and gave a shortlist to the search committee. At this point, the finance ministry is believed to have pushed for Khosla, who was interviewed by the search committee.
While Khosla was rejected after interviews by the search committee on the grounds that other candidates had solid experience in the financial services business, the ministry has repeatedly pushed his candidature. Khosla is the brother of Omita Paul, adviser to finance minister Pranab Mukherjee. Incidentally, Paul has worked with Mukherjee not only in the finance ministry but also in his earlier stints at the defence and external affairs ministries.
Khosla is now an officer on special duty in the Indian Institute of Corporate Affairs, an autonomous body under the ministry of corporate affairs. An officer of Assam cadre, he was a joint secretary in the ministry till April 2010 and handled the Satyam scam. For the January to March 2011 quarter, UTI AMC had assets under management of Rs 67,189 crore. While it is India’s oldest mutual fund, the fund house has slipped to fourth position now. Repeated efforts by FE to obtain a response from the finance ministry met with no success.
|Last Updated ( Sunday, 27 November 2011 17:51 )|