The market regulator today directed Malvinder Singh, Shivinder Singh and other eight entities to repay with interest Rs 403 crore that they had diverted from Fortis Healthcare Ltd.
The Securities and Exchange Board of India, according to an order uploaded on its website, in its preliminary probe found the Singh brothers, had acted in a fraudulent manner by diverting nearly Rs 403 crore from Fortis Healthcare and misrepresented financial statements. The other named are Fortis Hospitals Ltd., RHC Holdings Ltd., Religare Finvest, Shivi Holdings Pvt Ltd., Malav Holdings Pvt Ltd., Best Healthcare Pvt Ltd., Fern Healthcare Pvt Ltd. and Modland Wears Pvt Ltd.
In an interim order, the regulator also directed the 10 entities to not dispose of any assets. The Singh brothers have been asked not to associate themselves with the affairs of the company.
The Singh brothers, who lost control of Fortis Healthcare and Religare Enterprises Ltd. after lenders converted pledged shares, face allegations of siphoning funds from the two companies. That was allegedly used to settle personal debt even as their multi-billion-dollar fortune collapsed.
In this case, SEBI found that prima facie the loss was due to a diversion of funds to promoters and promoter-related entities.
Fortis Healthcare, through its subsidiary, was giving inter-corporate deposits to the three companies that had the same set of directors. However, these transactions were not classified as related party transactions, said SEBI.
These loans – which were given in the beginning of each quarter and returned by these three entities by the end of the quarter—were never reported in the balance sheet as the outstanding amount at the end of the period was nil.
But for the quarter ended September 2017, the amount was not returned by the borrowers as they didn’t have enough cashflow to repay Fortis Healthcare.
(This story was first published on BloombergQuint and has been republished with permission.)
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