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A week after Templeton India AMC and its senior managers were penalized by SEBI, the AMC proudly announced how it had already disbursed over Rs.17,000 core out of the Rs.25,000 crore stuck in the shuttered funds. That is where the Templeton Fund probably lost the plot. It is time for them to acknowledge the flaws in process, compliance and ethics and just let law take its own course.
What Templeton MF claimed was that Rs.17,000 crore had been disbursed to the unit holders of the shuttered debt funds. What it did not say was that had it not been for SBI MF taking over the process, it would still have been in limbo. It was only because the court intervened and appointed SBI MF to handle the monetization and distribution of assets that it actually happened. It is time for Templeton to stop acting naïve. There is one more thing the fund did not really talk about. Saying that Rs.17K represents 68% of the funds shuttered is half-truth. The funds have been idle for 15 months and even if you assume 12% opportunity cost, then just about 56% of the funds have been recovered. Also, it is estimated that most of the low hanging fruits and saleable paper is done and dusted. Going ahead, the fund collections would either be negligible or nothing at all. That means, unit holders will still contend with effective haircut of over 40%. That is a lot of money lost.
You can summarize the Templeton story in just 3 sentences. Firstly, the trustees did not act in the larger interests of the unit holders, whose interests they were supposed to protect in the first place. Secondly, fund managers have played ducks and drakes with public money. That they got incentivized for enticing flows into these funds shows that it had the tacit approval of the top echelons. Lastly, the fund showed total arrogance when it came to their administrative duties and almost tried to put the onus on the unit holders. It was only due to the intervention of the Supreme Court and SBI Funds that investors have at least recovered something.
It is a sad day for markets to see a very reputed CEO with a 30-year track record trying to gain access to insider data. It is worse to see such a CEO using such data to make personal gains knowing fully well that his fiduciary responsibility towards unit holders was at stake. But what is most atrocious is the very same CEO trying to behave like a boy lost in the woods and pleading innocence as well as ignorance of what happened. It is high time Templeton of the US gets involved and sorts things. Templeton has to pay for its actions and there is not getting away. The least it can do is to salvage its reputation as a global fund powerhouse. That is critical!