The Securities and Exchange Board of India (Sebi) in an order on Tuesday restrained Gautam Thapar, VR Venkatesh, Madhav Acharya and B Hariharan from accessing the securities market, prohibiting them from buying, selling or otherwise dealing in securities in any manner.
The markets regulator has also restrained them from being associated with any intermediary registered with the Sebi or any listed entity or its material unlisted subsidiary, till further orders.
The order also stated that BSE shall appoint an independent auditor/audit firm for conducting a detailed forensic audit of the books of accounts of CG Power from the financial year 2015-16 onwards till date.
The expenses for the aforementioned forensic audit shall be borne by the company. The above directions from the market regulator shall come into force with immediate effect and shall be in force till further directions.
CG Power and Industrial Solutions had on August 20 announced that the total liabilities of the company and the group may have been potentially understated by approximately Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as at March 31, 2018, and by Rs 601.83 crore and Rs 401.83 crore, respectively, as at April 1, 2017. “Certain assets of the company that were purportedly provided as collateral without due authority; and the company was made a co-borrower and/or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. The moneys so obtained were immediately and without due authorisation routed out of the company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties,” the company had said in the exchange filings.
The Sebi had met the officials of CG Power on August 22, 2019, and had sought information on the matter in order to examine as to whether or not there were any violations of the provisions of securities laws, by the company and its directors/promoters, during the period 2016-2019. The company had submitted a copy of the preliminary Investigation Report on August 26, 2019. Sebi had also sought responses inter alia from the chairman (Gautam Thapar), past directors (Madhav Acharya, B Hariharan) and CFO (VR Venkatesh).
“It is noted that the funds diverted from CG Power were fraudulently transferred to its promoter company i.e. Avantha Holdings and entities related/connected with the company, viz Avantha International, Acton, Ballarpur International, Mirabelle and Solaris, without the knowledge of the company and without any approval from its board. Having regard to the findings in the preceding paragraphs, the aforementioned entities as recipients of the fraudulent transfer of funds of the company amounting to `1,223.80 crore and are prima facie liable for the manipulation in respect of the financials of CG Power,” said Sebi in its order.
The interim investigation report by Vaish Associates and Deloitte found multiple irregularities in the dealings of CG Power. One of the key findings of the investigation showed that CG Power may have availed term loans which were further transferred as “remittance instruction” to Avantha International, an entity owned by Gautam Thapar. —FE