Sonny Kalsi on 'administrative leave'

Shake-up as Morgan Stanley’s New York-based global head of real estate investments is placed on ‘administrative leave’ with no date to return to his post. Owen Thomas, head of Morgan Stanley Asia, has taken over the role in the meantime, according to reports.

Morgan Stanley’s head of real estate investing, Sonny Kalsi, has been placed on ‘administrative leave’, according to a report on Bloomberg.

Owen Thomas, head of Morgan Stanley Asia, has taken on the additional role of chairman and chief executive officer of Morgan Stanley Real Estate Investing, according to the newswire, while Jay Mantz, who has been co-head of merchant banking, will now be president and chief investment officer of the division. Mantz ran property investing from 2000 to 2005.

Kalsi was instrumental in expanding the company’s operations in Asia. Recently, he was placed in charge of the global real estate investing division following a decision by fellow global co-head John Carrafiell to step down and become senior advisor from January this year. 

According to those with knowledge of the matter, the bank's co-president, James Gorman, ordered this week's management reshuffle as a result of the decision to place Kalsi on administrative leave. Kalsi is still on full pay but there is no date for a return to resume duties. The bank declines to comment.

News of his 'departure' comes as the firm prepares to close its latest global real estate fund this quarter. Morgan Stanley Real Estate Fund VII Global, which has raised at least $6 billion, does not contain key man clauses in line with all previous Morgan Stanley real estate fund documentation, according to a person familiar with these matters.

It is the second shock for investors this week. Today it also emerged that the firm had uncovered “actions” by a former employee that “appear to have violated the Foreign Corrupt Practices Act”.

In an SEC filing, Morgan Stanley said a former China-based employee of an overseas real estate subsidiary has had an employment contract terminated. The individual has been reported to the authorities and the firm continues to investigate. Reuters reports that Garth Peterson, former head of real estate investing in China, is the individual under investigation. Morgan Stanley has not commented on the identity of the individual, adds Reuters.

The Foreign Corrupt Practices Act is a US-law which covers bribery. It prohibits firms and their employees from offering, paying, promising to pay, or authorising payment of money, gift or anything of value to any foreign official to influence acts or decisions by governments or political party officials.

It covers instances where an employee helps an employer to win or retain business in a foreign country by offering money or something of value directly or indirectly to any foreign official, political party or candidate for foreign political office.