The Securities and Exchange Board of India, or Sebi, in an order passed on Thursday found that funds to the tune of ₹2,315 crore were diverted from the books of Religare Finvest Ltd and Religare Enterprises Ltd towards the benefit of erstwhile promoters namely Shivinder and Malvinder Singh.
Pending complete investigations, the regulator directed Religare Finvest and Religare Enterprises to recover the so-called loans which were allegedly diverted towards the Singh brothers, the erstwhile promoters of Religare.
"Pending detailed investigation, a remedial action is required to be taken by way of an interim ex-parte order to protect the interests of shareholders of REL as funds to the tune of ₹2,315.09 crore (approx.) have moved out from RFL for the ultimate benefit of erstwhile promoters of REL," said G. Mahalingam, whole-time member, Sebi, in the order.
The 24-page order highlighted the role of 21 entities or companies that have been used in the alleged routing of these funds. Some of these companies at the centre are interestingly the ones that were involved in ₹473 crore of fund diversion from Fortis Hospitals, according to Sebi order in December.
Mint had reported first on 19 February that Sebi and Serious Fraud Investigations Office (SFIO) suspects fund diversion of more than ₹2,000 crore involving the erstwhile promoters of Fortis and Religare.
Sebi in the order also directed the Singh brothers to disassociate themselves from the affairs of the two companies.
Sebi in May last year had appointed MSAProbe Consulting as a forensic auditor to examine the alleged diversion of funds following a complaint.
"The recorded recipients of funds were merely a facade for REL’s promoters and their agents," said Mahalingam citing the allegation against the companies.
The auditor submitted its report in December last year finding four routes that are centre of the so-called fund diversion.
According to the Sebi order the funds from the books of Religare Finvest were diverted using four routes-- fixed deposits with Lakshmi Vilas Bank of ₹729.13 crore, loans of ₹250 crore to Bharat Road Network and OSPL Infradeal, loans to promoter linked entities to the tune of ₹1,260.96 crore and another ₹75 crore to Religare Enterprises entities.
Sebi in the order found that two fixed deposits with Lakshmi Vials were adjusted against loans availed by two group companies of the promoters.
"The fixed deposits placed with LVB were the only ones against which no lien was created and no business transaction was facilitated, it strengthens the concern that the fixed deposits were not created as part of normal business transactions," Sebi said quoting the forensic audit. The ultimate beneficiary of ₹729.13 crore of FDs was RHC Holding Pvt Ltd, a Religare group company.
The loans given to OSPL and Bharat Road were not consistent with the investment policy of the Religare Finvest.
These transactions were allegedly designed to facilitate back-to-back borrowing by and for the benefit of the promoters and group entities of Religare Enterprises to the tune of ₹1,260.96 crore and ₹75 crore.
One such instance of alleged fund diversion is use of Best Healthcare, Davera Developers Ltd, Vitoba Realtors Ltd.
"Loans were given to Best, Davera Developers and Vitoba Realtors on the same day by RFL and the utilization of the same was also through common entities." The fund of ₹115 crore given by RFL to Best, Devera and Vitoba were utilised by/benefitted RHC Holding to pay off liabilities, Sebi added.