Sebi Asks Singh Brothers To Return Defrauded Money To The Tune Of Rs 4 Billion

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New Delhi: Securities and Exchange Board of India (Sebi), the market regulator, has determined the former owners of the India’s second-largest hospital chain defrauded the company of Rs 4 billion ($54.3 million) and ordered that they return it.

The Sebi said that it will continue to investigate the alleged fraud at Fortis Healthcare Ltd. to determine the role other parties may have played. In the meantime, it has given the founders and former majority owners Malvinder and Shivinder Singh, and their related corporate entities, three months to pay the money back. Sebi began investigating the matter in February after a report on the issue, according to the order.

A spokesperson for the Singh brothers’ main holding company declined to comment on the regulatory order.

The regulatory action adds to an already long list of liabilities facing the Singh brothers, who once controlled a business empire in India worth billions of dollars that is now largely lost. Lenders seized their Fortis shares earlier this year and Malaysia’s IHH Healthcare Bhd. has since agreed to acquire the company. An Indian court has also ordered they pay about $500 million to Japanese drug firm Daiichi Sankyo Co. to settle another fraud case. And the results of a separate probe into financial irregularities at the Singhs’ companies by India’s fraud office have yet to be released.

Sebi’s order details the results of its months-long investigation and alleges that the brothers used a complex web of shell companies and financial transactions to hide that they were the ultimate beneficiaries of loans made by Fortis. The regulator claims the Rs 4 billion was used to return money their holding company had borrowed from India Bulls Mutual Fund and HDFC Ltd, or routed to their financial-services company, where India’s central bank has found they diverted funds previously.

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