Fortis Asks India to Arrest Tycoon Founders Accused of Fraud
Fortis wants founders arrested after they failed to repay the amount that SEBI had determined they had fraudulently taken out.
(Bloomberg) -- Fortis Healthcare Ltd. petitioned India’s market regulator to arrest its founders after the Singh brothers failed to repay 4 billion rupees ($56 million) that the watchdog had found they had fraudulently taken out.
The company earlier this month had requested the Securities and Exchange Board of India to use its legal authority to recover the money from Malvinder and Shivinder Singh, said Fortis spokesman. The regulator in October had ordered the Singhs, formerly controlling shareholders, to return the money, plus interest, within three months.
Shivinder Singh said in a statement to Bloomberg that the alleged fraud at Fortis occurred after he had resigned from all his executive roles at the company in Sept. 2015, and it would be "grossly unjust" to hold him responsible for decisions “taken by others.” He called Fortis’ request to SEBI “premature, unfair” as the regulator has only come out with preliminary findings in the probe.
Malvinder Singh and SEBI spokesman N Hariharan couldn’t be immediately reached through phone and text messages.
The petition deepens the legal jeopardy faced by the ex-billionaire brothers, who have lost much of their corporate empire to debt, and are still being chased by creditors. Lenders seized much of the Singhs’ pledged shareholding in Fortis, the nation’s second-largest hospital chain that is now controlled by IHH Healthcare Bhd.
They are also being pursued in an Indian court by Japanese drugmaker Daiichi Sankyo Co. Ltd. for $500 million to settle a separate fraud case.
The reversal of fortunes has led to family acrimony. Elder brother Malvinder filed a separate police complaint accusing Shivinder and the pair’s spiritual guru of defrauding their family holding company. That came after the brothers’ mother had brokered a truce that caused Shivinder to withdraw a lawsuit against Malvinder alleging “oppression and mismanagement.”
Fortis’ shares have declined 15 percent in the past year after allegations against Singh brothers’ were reported by Bloomberg. The stock gained 0.3 percent at the close to 136 rupees in Mumbai on Monday.
To contact the reporter on this story: Ari Altstedter in Mumbai at aaltstedter@bloomberg.net
To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Bhuma Shrivastava
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