Fortis Healthcare funds diversion case: SEBI bans Shivender and Milvender Singh from markets

Market regulator SEBI has banned Shivinder Singh and Malvinder Singh, the former promoters of Fortis Group, for three years or until they repay over ₹400 crore to Fortis Healthcare (FHL) with interest. SEBI had directed the Fortis Healthcare audit committee to regularly monitor the progress of such measures being taken by the company and report the same to the board. Other entities, including RHC Holding, Malav Holdings, Shivi Holdings, Gagandeep Singh Bedi and Bhavdeep Singh, have been barred from the markets and associated with any listed company. SEBI has also imposed monetary fines on them.  

SEBI had observed that the Singh brothers, the erstwhile promoters of Fortis group, had siphoned off money from the company through various layers of transactions and under the garb of investment through ICDs between January 2016 to May 2016.

SEBI had found that the Singh brothers took more than ₹400 crore out of the FHL group, and the statutory auditors had refused to sign on the company’s second-quarter results until the funds were accounted for. Fortis group had granted loans to three Indian companies in inter-corporate deposits. Three borrower companies, entities connected to the Singh brothers, were examined by a forensic auditor. FHL and other group companies issued several short-term loans to benefit promoters where the loans were repaid by channelling the funds through various companies.

It was observed that the ultimate beneficiary of the loan given by the company was RHC Holdings, a company promoted by the Singh brothers. A similar pattern was seen with loans to various other unrelated entities that benefited RHC holdings, a company belonging to the Singh brothers. Ventures Pte Ltd, a wholly-owned subsidiary of IHH Healthcare Berhad, is now the promoter of Fortis.

SEBI also found that ₹576 crore was transferred from Fortis to RHC Holding (through Best Healthcare, Fern Healthcare and Modland Healthcare) on December 28, 2011. RHC Holding utilised this money for more than three  years, and FHL made no such disclosure in its financial statements during the concerned FYs. From the analysis and pattern of flow of funds, it is alleged that the same was carried out to falsely portray that RHC Holding had paid the consideration money of ₹600 crore in three tranches to 4 years, without any such disclosure made by FHL in its consolidated financial statements during the concerned FYs.

Published on

April 19, 2022

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