While the current board of Fortis Healthcare has struggled to determine if there is a fraud at the hospital chain, former promoter Shivinder Mohan Singh has stated in his petition at National Company Law Tribunal (NCLT) that his elder brother Malvinder Mohan Singh and “close family friend” Sunil Godhwani “misused Fortis and extended inter-corporate deposits in contraventions of various laws”.
Fortis Healthcare had said in June that markets regulator Sebi has ordered a forensic audit in the matter of the company, which has admitted to systemic lapses in giving Rs 494.14 crore worth of loans to firms controlled by erstwhile promoters — Singh brothers. Deloitte Haskins & Sells LLP, the independent auditor, had on July 7 stated that Fortis’ board of directors “are unable to make determination” whether a fraud has occurred in the company or not.
The Singh brothers used to control Fortis through individual shareholdings as well as their investment firm RHC Holdings. On August 14, Fortis Healthcare had announced that its shareholders have agreed to its acquisition by IHH Healthcare. Shivinder stated in his NCLT petition: “Respondent No. 2 (Malvinder) in collusion and connivance with Respondent No. 4 (Godhwani) misused Respondent No. 5 (Fortis) and extended Inter-corporate Deposits in contraventions of various laws which became the key issue for depicting oppression and mismanagement in Respondent No. 1 (RHC Holdings) Company.”
He added: “That the amount of approximately Rs 473 Crore taken out from Fortis was used to; inter alia preferentially pay creditors of RHC Holdings… These resources were taken from Fortis despite Malvinder being fully aware of precarious financial position of Fortis. This resulted in Fortis, a listed company, entering into a debt trap prejudicing the interest of its shareholders at large due to the actions of Malvinder.”
Fortis Healthcare, on June 27, had said that it had initiated legal action to recover the inter-corporate deposits (ICDs) given to the three firms after an external investigation found “systemic lapses and override of controls” in the loan given. The loans were given without Board approval and enough collaterals, it had said.
In his petition, Shivinder mentioned that there are various emails from RHC officials proving that “Godhwani was informed about the precarious financial position of the RHC”. Shivinder added in his petition: “Further the email communications demonstrates that the officials of RHC Holdings were being asked by Malvinder not to do anything with regard to loan taken by promoter companies without his consent.” Fortis was one of the promoter companies.
Shivinder added in his petition that he learned of the outstanding ICD in October 2016 and “was not involved in the conception or execution of such ICD”.