Revelations from the Mauritius Leaks on the offshore holdings of Shivinder Singh and Malvinder Singh, the former promoters of Religare Enterprises, are being described as “corroborative evidence” for the Enforcement Directorate (ED) as it moved in on Thursday to search their residences as well as those of their associates Sunil Godhwani, N K Ghoshal and Hemant Dhingra.
The Indian Express investigation, in collaboration with the International Consortium of Investigative Journalists (ICIJ), as part of the Mauritius Leaks and Paradise Papers, was published on July 23, 2019, and revealed that Religare Capital Markets Ltd (RCML), a wholly-owned subsidy of the Indian entity, Religare Enterprises Limited (REL), set up an investment holding subsidiary in Mauritius in 2008 called Religare Capital Markets International (Mauritius) Ltd.
And this, in turn, became the instrument to acquire stakes in another Jersey firm, NCM Limited. The shareholders of NCM Limited are Shivinder Singh and Malvinder Singh as well as their spouses. While the investigation uncovered the Mauritius and Jersey ends of the complex corporate web created by the former Fortis promoters, ED officials said their focus was also on the beneficiary companies allegedly used by them in India to “divert” funds.
The “beneficiary” firms, listed by ED, and covered in Thursday’s searches, are RHC Holding Pvt Ltd; Malav Holding Pvt Ltd and Shivi Holding Pvt Ltd, all located in Connaught Place, New Delhi; as well as Arch Finance Limited, in Daryaganj, New Delhi. N K Ghoshal, a resident of Faridabad, is shown as founder and promoter of Arch Finance Limited, allegedly one of the “beneficiary” firms.
In all, officials said, 16 companies used for alleged “diversion” of funds by the former Religare promoters are under investigation.
For their case under the Prevention of Money Laundering Act (PMLA), the ED borrowed heavily on allegations by Delhi Police in their FIR dated March 27, 2019. The ED has alleged that “Malvinder Mohan Singh and Shivinder Mohan Singh, in conspiracy with Sunil Godhwani caused it (Religare Finvest Limited, the complainant company) to give unsecured, high value purported loans under Corporate Loan Book (CLB) to shell companies and related/known entities of Malvinder Mohan Singh and Shivinder Mohan Singh.”
The ED also picked up the allegation, first made by the Delhi Police, that loans were also extended to 19 entities controlled by the Religare promoters and Ghoshal who subsequently, “wilfully defaulted” on the loans to the extent of Rs 2,397 crore as principal and Rs 415 crore as interest. The ED noted that these 19 entities never repaid the loans and diverted funds into a “complex web of companies” of interconnected transactions to divert money.
A week ago, The Indian Express had reported that documents obtained from Appleby and Mauritius-based Conyers, Dill and Pearman — two incorporators of offshore companies — revealed that Religare Capital Markets Ltd (RCML), a wholly-owned subsidiary of REL, set up an investment holding subsidiary in Mauritius in 2008. This subsidiary acquired a 30 per cent stake in Jersey-headquartered entity NCM Limited whose beneficial owners were the Singh brothers.
“We would like to reiterate, the promoters neither own or have or had any stake in NCM Ltd. Appleby’s have named the promoters, as this is the regulatory requirement in Jersey where NCM Limited was incorporated,” a spokesperson for the Singh brothers had said in response to a questionnaire based on Appleby documents. The spokesperson added that the 30 per cent stake in NCM was acquired after “seeking all necessary regulatory approvals including from the RBI and SEBI.” And that in March 2015, the Mauritius subsidiary divested all its stake in NCM. “The promoters were neither part of the Board nor the management of Religare during that period,” the spokesperson said.
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