By Elton Gomes
Former Ranbaxy promoter and founder of Fortis Healthcare, Shivinder Mohan Singh has filed a case against his elder brother Malvinder Mohan Singh in the National Company Law Tribunal (NCLT), as the Fortis Healthcare dispute gets murkier.
Shivinder has cited oppression and mismanagement at RHC Holding, Religare, and Fortis, thus indicating discontent between the siblings after they lost their business due to allegations of wrongdoing.
Shivinder has also filed a case against Sunil Godhwani, former Religare Enterprises chairman and managing director. The collective, ongoing, actions of Malvinder and Sunil Godhwani led to a systematic undermining of the interests of the companies and their shareholders mentioned above as also the committed and loyal employees of the group, Shivinder said in a statement, the Economic Times reported.
During the last six months, both the Singh brothers have seen a dramatic decline in their fortunes. After becoming heirs to a generations-old business firm, which was once worth billions, Shivinder and Malvinders public shareholdings have been seized by lenders.
What has Malvinder Singh been accused of?
In a statement to the Economic Times, Shivinder accused Malvinder of making decisions that resulted in the weakening of the company. Shivinder said that decisions made in Religares NBFC arm led to one of the most damaging arbitration cases in the history of India.
In addition to this, Shivinder blamed Malvinder for the countless losses accumulated while running Ligare aviation, a private charter airline business.
Furthermore, Shivinder alleged that the actions of Malvinder and Godhwani resulted in a systematic undermining of the interests of the companies and their shareholders.
The Fortis scandal
The Fortis scandal has been ongoing for the past six months. In July, Fortis claimed that both Shivinder and Malvinder Singh diverted Rs 500 crore of the publicly traded companys cash to other entities without seeking the boards approval.
An independent law firms investigation indicated that the founders may have used fresh funds to repay a part of previous advances. The board said it would leave it up to regulatory inquiries to determine whether a fraud has occurred.
The Singh brothers are known for their friendly ties with the owner of Radha Soami Satsang Beas – Gurinder Singh Dhillon. Over the years, the Singh brothers main holding company loaned approximately Rs 25 billion to the Dhillon family and other property businesses largely controlled by them, as per documents and people familiar with the matter.
Out of these, some outlays were financed with money borrowed from companies listed with the Singhs. When these investments were combined with other deals, the Singh empire ran into huge amounts of debt, as per a Bloomberg analysis.
Prime Minister Narendra Modis attempts to increase transparency and attract more foreign direct investment further added to the downfall of the Singh empire. Meanwhile, Malvinder and Shivinder have not yet been charged with any crime, but they have acknowledged having financial links with Dhillon. They have said that they are in contact with the Dhillon family and its companies to seek answers about the money owed to them.
SEBI orders forensic probe
A probe held in June exposed the Singh brothers to legal trouble. The SEBI had ordered a forensic audit into the affairs of the company after it raised suspicion of a financial fraud worth Rs 473 crore. It believes that the money was syphoned off by parties related to the former promoters.
Fortis Healthcare sells hospital business
In March, Fortis Healthcare announced that it would be selling its hospital business to Manipal Hospitals Enterprises Private Ltd, thus creating the largest provider of healthcare services in India in terms of revenue.
The Gurugram-based Fortis said that it had also approved the sale of a 20% stake in diagnostics chain SRL Ltd to Manipal Hospitals, which would provide Fortis with more than Rs. 7 billion.
Elton Gomes is a staff writer at Qrius