SEBI to Fortis Healthcare: Recover Rs 403 cr and interest from promoters
The Securities and Exchange Board of India ordered Fortis Healthcare Ltd to take all necessary steps to recover Rs 403 crore, along with interest, from its former promoters, Malvinder Mohan Singh and Shivinder Mohan Singh, within three months.
The order follows a preliminary investigation into the loans given by the company's subsidiary Fortis Hospitals Ltd, as part of 'treasury activities'. The loan was later classified as a related-party transaction as a change in shareholding resulted in the investee company becoming a part of the promoter group, Fortis Healthcare had said in February.
"A detailed investigation of the entire scheme employed in this case is necessary to find out the role of each entity in the alleged routing of funds," the market regulator said in its order. "Such investigation by SEBI shall not be limited to ascertaining the role of the noticees into the entire fraud but would also extend to other entities who may have played a role directly or indirectly in the entire fraud, including banks and auditors, if necessary.”
The investigation by SEBI, initiated in February, showed that Rs 403 crore given by Fortis Hospitals to three entities related to the Singh brothers—Best Healthcare Pvt Ltd, Fem Healthcare Pvt Ltd and Modland Wears Pvt Ltd—was routed to the brothers' RHC Holding Pvt Ltd, another former promoter of Fortis Healthcare, or Religare Finvest Ltd. Religare Finvest is an arm of Religare Enterprises Ltd, another company of which the Singh brothers are former promoters. Fortis Healthcare had also conducted an internal investigation by law firm Luthra & Luthra. The law firm said there were systemic lapses in the process of giving the loan to the entities, and the loan was taken without specific authorisation from the board of Fortis Hospitals.
It had also said that former executive chairman Malvinder Singh had overruled the objections raised by the management of arm Fortis Hospitals Ltd and forced it into giving loans to certain entities affiliated to him, a report of an internal probe initiated by the company said.