Warring brothers Malvinder Singh & Shivinder Singh face prison time for fund diversion from Fortis. This marks another low in the history of a once iconic Indian business family.
- Fortis management has asked SEBI to initiate proceedings against Malvinder Singh and Shivinder Singh in the fund diversion case.
- The diversion was done in connivance with Gurinder Singh Dhillon, head of the famous Radha Soami Satsang Beas (RSSB).
- The Dhillon family allegedly used the loans to invest in real estate, and got stuck when the sector collapsed.
- Malvinder has now submitted a complaint to the Economic Offences Wing, accusing his brother, Dhillon and others of fraud and death threats.
The ongoing imbroglio between former Fortis promoters Malvinder Singh and Shivinder Singh provides more than enough masala for a Bollywood potboiler – two estranged scions of a once iconic Indian business family, reckless expansions, fund diversions, terrible business decisions, frauds, losses, death threats, fisticuffs, and a not-so-spiritual guru of a very famous religious sect.
A large quantum of funds has been
allegedly diverted from Fortis to the Singh brothers and entities related to them. The amount of fund diversion estimated earlier by Securities and Exchange Board of India (SEBI) was Rs 403 crore. It had also passed an order to the effect that Fortis recover Rs 500 crore from the Singh brothers. Fortis Management has asked SEBI to initiate legal proceedings against the duo to recover the money, even if it means arrest.
But another investigation by Serious Fraud Investigation Office (SFIO) on the money trail has revealed that fund diversion from Fortis Hospital to promoter entities could amount to over Rs 2,000 crore. Even SEBI believes that its earlier estimate was too conservative.
Morally toxic family ties
The diversion occurred through six promoter-owned companies as reported by Mint, with the close involvement of Gurinder Singh Dhillon, head of Radha Soami Satsang Beas (RSSB), and Sanjay Godhwani, a former associate of Malvinder and Shivinder Singh. Gurinder also happens to be an uncle of the Singh brothers.
Apart from this, Rs 1,006.3 crore was extended by Fortis and Religare Enterprises to the six promoter-related entities – Best Healthcare Pvt. Ltd, Devera Developers Pvt. Ltd, Fern Healthcare Pvt. Ltd, Modland Wears Pvt. Ltd, Adept Creations Pvt. Ltd and Green Line Buildwell Pvt. Ltd.
The Dhillons and associates of RSSB were reportedly attracted to real estate like most others and these companies took the loans to make large investments in the sector. But they were stuck once the real estate sector collapsed, leaving the brothers in a limbo as well.
Malvinder Singh has himself filed a complaint with the Economic Offences Wing. He claims that Shivinder was in cahoots with Dhillon and sold these companies to RHC (a holding company promoted by the Singh brothers), without any due diligence or checks on their businesses. The outstanding dues were estimated to be at Rs 8,742 crore as of March 2018.
According to the investigations (as alleged by Malvinder Singh), RHC Holdings provided loans of around Rs 5,482 crore to the family members of Dhillon, their associates, or entities under their control.
Blood is thinner than…
Dhillon later abdicated responsibility and told the Singh brothers to agree on a settlement that would absolve him of liabilities. According to the proposed settlement, Shivinder was offered the position of head of the Radha Soami Satsang Beas sect, as Dhillon would step down. In exchange, the brothers were supposed to write off the loans. The terms were agreeable to Shivinder, but not to Malvinder.
Malvinder has filed the complaint against his brother, along with the Dhillons and Sunil & Sanjay Godhwani, accusing them of misappropriating funds and seeking Rs 8,742 crore in compensation. He also accuses Gurinder Singh of
threatening to kill him through his lawyer. Malvinder alleges:
“It is clear that Dhillon, in the garb of providing spiritual guidance, had gained complete trust and…amassed wealth from the financial facilities extended to the Dhillon family. The true extent of the fraud has not come to light as the entities are tightly controlled by the accused and requires a thorough investigation.”
Relations between the brothers have gone south ever since the news of fund diversion became public. It worsened over the payment of arbitration to Daiichi Sankyo, which accused them of
concealing facts before the sale of Ranbaxy. The two brothers decided to fight the case through separate counsels.
Last year, Shivinder accused Malvinder of conniving with Sunil Godhwani to undermine the interests of the companies. He also accused Malvinder of forging his wife’s signature. In December 2018, both brothers accused each other of physical assault. And now with the SEBI crackdown looming large, they could soon be joining each other in prison.
- The Singh brothers have suffered a huge fall from grace from the time they inherited India’s leading pharmaceutical company Ranbaxy Laboratories in 2008.
- Rather than build on the legacy, the brothers chose to sell it off in 2008 and invest in Fortis Healthcare and Religare Enterprises.
- Lending vast amounts of money to the Dhillons was an unethical and reckless diversion of shareholder money.
- Considering the manner in which they surreptitiously transferred money from one entity to another without
due diligence or fiscal discipline, the Singh brothers have only themselves to blame for the situation they are in.