The Hindu : Karnataka / Bangalore News : Unauthorised investment cost BMRCL Rs. 1.64 crore

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Sunday, Mar 21, 2010
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Karnataka

Karnataka - Bangalore

Unauthorised investment cost BMRCL Rs. 1.64 crore

Staff Reporter

Rs. 30 crore had been invested with PAMCL in equity-based and liquid-based funds
Broker reportedly made good Rs. 3 crore
of his own volition

BANGALORE: The unauthorised investment in private equity funds through a broker by the executive director (finance) of Bangalore Metro Rail Corporation Ltd. (BMRCL) in 2006 has caused loss of Rs. 1.64 crore, Comptroller and Auditor General (CAG) has said in his report.

The improper investment of Rs. 30 crore in violation of guidelines of Karnataka State Bureau of Public Enterprises indicated poor corporate governance in BMRCL, the report released on Friday pointed out.

The BMRCL invested Rs. 10 crore in January 2006 and another Rs. 20 crore in April 2006 with Principal PNB Asset Management Company Private Ltd (PAMCL) that operated various funds which were liquid based and equity based. The executive director (finance) made the investments without the approval of the Managing Director, who was authorised by the board to take decisions.

As against the investment of Rs. 30 crore, the amount realised was only Rs. 28.36 crore.

Suspicious move

“Surprisingly, the broker on his own accord paid Rs. 3 crore directly to PAMCL in June 2007.

“The personal interest shown by the broker in making good the loss indicated that the broker had made gains using government funds, quantum of which was not on record,” the report said.

Responsibility fixed

An audit sub-committee has fixed the responsibility on the executive director (finance) and has been approved by the board in December 2008. Request to initiate disciplinary action against the official has been made by the board.

Sources in BMRCL told The Hindu that Sandeep Dash served as the executive director (finance) during 2006.

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