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New Delhi: Top executives of Fortis Healthcare Ltd, including its chief executive Bhavdeep Singh and chief financial officer Gagandeep Singh Bedi, knew about the loans made to three entities allegedly linked to the former promoters of the hospital chain, Malvinder and Shivinder Singh, a Mint investigation shows. Not only were they aware of the transactions, the senior management also approved a majority of the outstanding loans worth 494 crore given to companies linked to the Singh brothers, documents reviewed by Mint show.

The loans were granted by Fortis Healthcare in December 2015 and had been released in tranches till May 2016, according to the documents.

In June 2018, the newly constituted Fortis board, under chairman Ravi Rajagopal, released the findings of a report by law firm Luthra & Luthra, which, according to Fortis, revealed that the management’s objections to these loans were “overruled".

However, in reply to an email dated 30 December 2015 with the subject, “Template for TC of Paper seeking Approval 29 Dec 2015_ICD.docx," Bhavdeep Singh, Malvinder Singh and Bedi approved investments in short-term inter-corporate deposits (ICD), as proposed by the company’s treasury committee members. Mint has reviewed a copy of the email.

According to the terms of the ICD proposal, it sought approval for investment of 300 crore from Fortis Hospitals Ltd into Best Healthcare Pvt. Ltd (around 200 crore) and Fern Healthcare Pvt. Ltd (around 100 crore). Mint has reviewed a copy of the investment proposal.

“The hold co (Fortis Healthcare Ltd will raise funds (₹ 300 crore) thru commercial paper @9.5% p.a for a period of up to sixty days and will give a loan to FHsL under an existing MoU @11.50% pa," the proposal added.

The email containing the investment proposal and marked to CEO Bhavdeep Singh and CFO Bedi show that they had approved the proposal.

The three recipients of the loans have defaulted on payments to Fortis Healthcare.

In an emailed response to a query, Fortis Healthcare said the allegations that “senior and key management personnel consented in giving out the ICDs to related parties is not correct and the same was also concluded by the report of Luthra & Luthra Law Offices (L&L), the independent firm which conducted the internal investigation of the matter".

“Objections pertaining to sanction of ICDs were raised by the key management including CEO and CFO, but were overruled. All relevant information pertaining to the transactions has been shared with the relevant investigating authorities," the company said.

An email sent to the Singh brothers on 10 July remained unanswered.

An approval for a similar investment proposal of about 478 crore in companies such as Modland Wears Pvt. Ltd (up to 150 crore), Fern Healthcare (up to 178 crore) and Best Healthcare (up to 150 crore) was sought on 1 April 2017. Mint has reviewed a copy of this proposal.

Documents that Mint has reviewed show that these investments, as recommended by Bedi, were approved by Malvinder Singh, Anurag Kalra and Jasbir Grewal.

Grewal was the chairman of the treasury committee and uncle of the Singh brothers. Kalra was investor relations officer of Fortis. The CEO was copied on all emails. However, there is no record that he has approved this transaction. Another approval was sought on 30 June 2017 for an investment of up to 494 crore in the above mentioned firms. Mint has also reviewed a copy of this proposal.

To be sure, Fortis has been giving loans to related parties through ICDs since 2011 and these were repaid till 2016. In fact, a roll-over mechanism was devised in 2016-17, whereby ICDs were repaid by the borrower companies at the end of each quarter and fresh ICDs were released at the start of the succeeding quarter.

In an email interview on 27 June, Malvinder Singh rejected the findings of Luthra & Luthra, and said the decisions were taken “collectively".

“It is unlikely that these ICDs could have been placed without the knowledge of senior management—CEO, CFO—given that bank transactions require multiple checks. Else, the internal controls within the company would be woefully inadequate," said Shriram Subramanian, managing director at proxy advisory firm InGovern.

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