SEBI to complete probe against Subhash Chandra, Punit Goenka in 8 months in fund embezzlement case

The Securities and Exchange Board of India (SEBI) yesterday ruled that the investigation into the fund embezzlement against Essel Group chairman, Subhash Chandra and Chief Executive Officer (CEO) of Zee Entertainment Enterprises Limited (ZEEL), Punit Goenka, should be completed within 8 months..SEBI Chairperson and Whole Time Member (WTM), Madhabi Puri Buch passed the order. She found that there existed a prima facie case against Chandra and Goenka and that they were involved in the execution of a scheme by which the ZEEL family ultimately benefited at the cost of funds belonging to public listed companies. “Entities (Chandra and Goenka) have actively tried to conceal the very acts which have led to the loss of at least INR 143.9 crore to the public listed companies including ZEEL”, Buch recorded in the order..Earlier, another WTM, Ashwani Bhatia passed an interim order on June 12, 2023, barring Chandra and Goenka from holding directorial or key managerial positions (KMP) in any listed company or its subsidiaries.Goenka and Chandra challenged this order before the Securities Appellate Tribunal (SAT), which was dismissed on July 10. The SAT also directed SEBI to appoint another WTM to hear the appeal filed by Goenka and Chandra challenging the allegations that they were involved in siphoning funds.Accordingly, the matter was heard by Buch, who has now confirmed the interim order passed on June 12 and modified it to the extent that Chandra and Goenka will not be allowed to hold directorial positions till the completion of the investigation. In the same August 14 order, Buch added that the SEBI should complete the investigation into the allegations against Chandra and Goenka within a period of 8 months..The order also explained that the duo is being barred from holding directorial positions during the probe to ensure that the assets of public listed companies are insulated from any control by Goenka or Chandra. “The rationale for the same is that while the proceedings in the matter are in progress, it is SEBI’s priority to insulate the assets of the public-listed companies from the exercise of any influence or control by the Goenka and Chandra. The same rationale applies to wholly owned subsidiaries of such listed companies because their assets, in effect, belong to the shareholders of such listed companies. the imminent effect of permitting the Entities to be in a position of influence is that the ongoing investigation cannot be fair and complete,” the 91-page order reads..The order clarified that the duo cannot hold any key managerial position in any resultant company formed pursuant to a merger or amalgamation involving the above-named companies. This also means that Goenka is restrained from becoming the MD at the entity formed after the recent merger of Zee and Sony Pictures..[Read order]