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The Securities Exchange Board of India has in an interim order directed Malvinder Singh, Shivinder Singh and eight other entities to repay a sum of Rs. 403 crores of diverted funds to Fortis Healthcare.
SEBI’s preliminary probe, which was a result of an article that appeared on Bloomberg, has revealed that 403 crores worth of funds were diverted through a complicated web of transactions between related and unrelated entities. The funds have been routed from Fortis Healthcare through several step down subsidiaries, to promoter entities, which are controlled by Singh brothers. The funds were diverted, as the order notes, for the ultimate benefit of the Singh Brothers.
Some of the money was routed through unrelated entities to avoid provisions of SEBI (LODR) Regulations and to misrepresent transactions.
Fortis Healthcare, through its subsidiary, granted inter-corporate loans to 3 Indian companies. These loans were, however, never reported as they were given at the beginning of each quarter and returned by the end of the quarter. But for the quarter ending September 2017, the amount was not returned by the borrowers as they didn’t have enough cash flow to repay Fortis Healthcare.
These 3 companies to which loans were given have also become related parties since December 2017.
Pending completion of the investigation and till further order, the Singh brothers and the eight entities have also been directed not to dispose of any of their assets or divert any funds without prior permission of SEBI. However, they can utilize funds for certain purposes, including for meeting expenses of day-to-day business operations, the order said.