Active Stocks
Fri Mar 01 2024 15:59:51
  1. Tata Steel share price
  2. 150.00 6.46%
  1. State Bank Of India share price
  2. 769.30 2.67%
  1. Tata Motors share price
  2. 977.20 2.78%
  1. ITC share price
  2. 409.50 0.74%
  1. ICICI Bank share price
  2. 1,086.90 3.18%
Business News/ Companies / Sebi orders audit of Fortis Healthcare, SFIO suspects fraud
BackBack

Sebi orders audit of Fortis Healthcare, SFIO suspects fraud

Sebi orders a forensic audit into the affairs of Fortis Healthcare following suspicion of financial fraud of 473 crore, SFIO is expected to submit its findings to corporate affairs ministry by July-end or August

Any act of fraud under Sebi norms is punishable by penalty up to ₹ 25 crore, or three times the money involved in the fraud. Photo: Aniruddha Chowdhury/MintPremium
Any act of fraud under Sebi norms is punishable by penalty up to ₹ 25 crore, or three times the money involved in the fraud. Photo: Aniruddha Chowdhury/Mint

Mumbai: The findings of an investigation into Fortis Healthcare Ltd have exposed former promoters Malvinder Singh and Shivinder Singh to further legal trouble with Sebi initiating a forensic audit and the Serious Fraud Investigation Office (SFIO) suspecting fraud, two people with direct knowledge of the matter said.

Markets regulator Securities and Exchange Board of India (Sebi) has ordered a forensic audit into the affairs of the company following suspicion of financial fraud of 473 crore. It believes the money was siphoned off by parties related to the former promoters.

Also read: Fortis Healthcare begins revamp of SRL Diagnostics board

“It suspects that the company, and the (erstwhile) promoters might have suppressed facts, and destroyed evidence, which is punishable by up to one year of jail, or 1 crore fine," said one of the two people cited above, both of whom spoke on condition of anonymity.

Any act of fraud under Sebi norms is punishable by penalty up to 25 crore, or three times the money involved in the fraud.

The auditor will submit its report by September to the regulator, the person added.

The government’s white collar crime division, too, believes that the funds given to borrowers was a clear case of fraud.

“SFIO is expected to submit its findings before the ministry of corporate affairs (MCA) by July-end or August. Under the Companies Act, MCA can impose strictures against the company such as penalties and ask for its nominees to be appointed as board members," said a government official, the second of the two people cited earlier.

Also read: Disclosures at Fortis paint a scary picture, investors seek deliverance

SFIO is examining the company, its material subsidiaries, joint ventures and associates, Fortis Healthcare said in a stock exchange filing on Wednesday.

An investigation by law firm Luthra and Luthra into Fortis’s accounts concluded that the Singh brothers were to be blamed for the mismanagement of the company’s finances.

The findings were made public by the company’s newly constituted board on Wednesday.

The probe report said a Fortis subsidiary had granted unsecured loans worth 445 crore to three companies related to the Singh brothers without the board’s approval and despite objections from the management.

Fortis has initiated legal action to recover the outstanding inter-corporate debt and other advances, the firm said in a statement to the exchanges.

Also read: Singh brothers are to blame for Fortis’ financial mismanagement, finds probe

Queries emailed to spokespersons of Sebi, SFIO and Fortis on Thursday did not elicit any response.

However, in its stock exchange filing on Wednesday, the company said that it had sent the report to Sebi and SFIO.

It added that the forensic auditor appointed by Sebi is in touch with the company and is collating documents.

“We have sought additional time to furnish the information sought by the SFIO," Fortis said.

The Registrar of Companies is also probing the alleged fraud.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

ABOUT THE AUTHOR
Jayshree P Upadhyay
Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
Catch all the Corporate news and Updates on Live Mint. Check all the latest action on Budget 2024 here. Download The Mint News App to get Daily Market Updates & Live Business News.
More Less
Published: 29 Jun 2018, 09:08 AM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App

Chat with MintGenie