InGovern Research, has raised several questions about the functioning of Fortis that had led to the erosion of investors’ wealth
Malvinder and Shivinder Singh promoted Fortis Healthcare could be facing "Satyam Computers like" situation, a proxy voting advisory firm has warned investors even as the Singh brothers have issued a press statement saying they were "not going anywhere".
Bengaluru-based InGovern Research, in a note, has raised several questions about the functioning of Fortis that had led to the erosion of investors' wealth.
Apart from utilising the cash to fund promoter's personal businesses, Fortis has been facing frequent restructurings and resignations from directors, it said. The report has blamed the company for skirting shareholder approval to make inter-corporate investments and violating accounting standards.
Fortis recently admitted having deployed funds to the tune Rs 473 crore with promoter-owned companies by terming them as secured short-term investments in the normal course of treasury operations.
The diversion of funds if not limited to Fortis alone. "The auditors' statements make it clear that the modus operandi of Religare has been the same as of Fortis as far as the movement of funds to Group companies is concerned," the note said.
"The issue of transferring funds to a wholly owned subsidiary which in turn lends to promoter entities, in order to skirt the shareholder approval requirement, seems to be blatant fraud," it said.
"Much like Satyam, the cash on the books of the Fortis Healthcare seem to be non-existent. The company's subsidiary has given loans to related parties without seeking shareholder's approval and regulatory filings," the note said.
The report blames the statutory auditors for not discharging their duty, saying that they have a responsibility to shareholder and should have reported the matter to the regulator and the reason for not signing on the second quarter statements. Fortis is yet to publish its Q2 and Q3 results.
Last week, the Securities and Exchange Board of India ordered an investigation into the matter and asked Fortis to furnish information related to fund transfers by 26 February. The report said the investigation should not be limited to Fortis but should also look into the irregularities at Religare as well.
The Serious fraud Investigation Office (SFIO) under the corporate affairs ministry has also initiated an investigation into the affairs of Fortis Healthcare and Religare Enterprises. The SFIO will look for violations under the Companies Act in both the companies.
Early this month, Singh brothers resigned from the board of Fortis Healthcare saying that the decision to distance themselves from the company was aimed at insulating the company from the promoters' ongoing legal battle. This came in the wake of Delhi High Court order upholding the Rs 3,500 crore award in favour of Daiichi Sankyo.
HISTORY REPEATS?
- InGovern Research, has raised several questions about the functioning of Fortis that had led to the erosion of investors’ wealth
- The report has blamed Fortis for skirting shareholder approval to make inter-corporate investments
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Malvinder Singh")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}