Religare Finvest Ltd and three senior officials of Fortis Hospitals paid a total of over Rs 4.34 crore to markets regulator SEBI to settle a case related to the diversion of Fortis Healthcare’s funds by its promoters and related entities.
Those who have settled the proceedings are the independent directors of Fortis Hospitals — Aditya Vij, Sandeep Puri and Balinder Singh Dhillon. Puri was also the chief financial officer of FHL and Dhillon was its non-independent director.
An investigation was initiated by SEBI in the matter of Fortis Healthcare Ltd (FHL) after an article published in February 2018 said its promoters have taken at least Rs 500 crore out of FHL and that its statutory auditor had refused to sign off on the company’s second-quarter results until the funds were accounted for.
It was alleged that Religare Finvest was one of the conduit entities that had aided and abetted the routing of funds from FHL, ultimately to RHC Holdings, for the benefits of the promoter entities.
The independent directors were alleged to have aided in the misuse and diversion of public shareholders’ funds through three borrower companies for the benefit of RHC Holding and consequently, Malvinder Mohan Singh and Shivinder Mohan Singh.
They had allegedly failed to carry out adequate due diligence and exercise independent judgment with respect to the grant of loans/ investments by Fortis Hospitals to the three borrower companies.
Besides, Puri had issued a misleading CFO certificate in the annual reports of FHL during the investigation period which stated that "the financials of FHL presented true and fair view of its affairs and not containing any misleading statement”.
Pending the proceedings, the applicants filed settlement applications with SEBI proposing to settle the case without admitting or denying the guilt.
Thereafter, in a meeting with SEBI’s internal committee, they proposed to pay settlement charges of Rs 93.50 lakh each for Balinder Singh Dhillon and Sandeep Puri, Rs 65 lakh for Aditya Vij and Rs 1.82 crore for Religare Finvest.
The respective amounts, after the high-powered advisory committee’s recommendations and SEBI’s whole-time members’ approval, were remitted by them in January."It is hereby ordered that this settlement order disposes of the aforesaid adjudication proceedings initiated against the applicants viz. Aditya Vij, Sandeep Puri, Balinder Singh Dhillon and Religare Finvest Limited vide SCN (show-cause notice)…dated April 9, 2021,” SEBI said.