Fortis founders alleged to have siphoned off Rs 500 cr out of hospital, co denies report

Fortis founders Malvinder Singh and his brother Shivinder Singh have been alleged to have siphoned off around Rs 500 crore or $78 million out of the publicly-traded hospital, Fortis Hospitals Ltd. (FHsL), without board approval a year ago, Bloomberg reported, quoting sources. However, in a letter sent to the exchanges, FHsL has denied the allegations.

The letter said that, “FHsL has deployed funds in secured short-term investments with companies in normal course of treasury operations. These entities as of the quarter ended 31 December, 2017 have become part of the promoter group due to a shareholding change in those entities. Subsequently, the same loans have been recognised as related party transactions in compliance with necessary regulatory requirements. These loans are adequately secured and the repayment has since commenced. The total value of the loans mentioned amounts to approximately Rs 473 crore.

File image of Malvinder Singh.

File image of Malvinder Singh.

“Further, we categorically deny the alleged news that 'auditors have refused to sign the accounts for Q2', and would like to update you that as informed to you …. letter dated 14 November, 2017 that the results for the Q2 could not be tabled before the Board for approval. The limited review process for the results of both Q2 and Q3 are in progress and as has already been intimated to your good office vide our letter …. dated 7 February, 2018, the un-audited financial results of the Company for quarter and period ended 30 September, 2017 will be presented before the Board of Directors at their scheduled on 13 February, 2018.”

The Bloomberg report mentioned that the funds reported on the balance sheet of FHsL as cash and cash equivalents was money routed and placed under the control of the Singhs at the time, according to the people in the know of the matter.

Meanwhile, in another development, PTI reported that the Singh brothers Malvinder and Shivinder have resigned as directors from the company’s board following the Delhi High Court order upholding the Rs 3,500 crore arbitral award in favour of Daiichi Sankyo.

The Singh brothers have jointly tendered their resignation to the Board of Fortis Healthcare, which will discuss it in the meeting on 13 February, the company said in a filing to the BSE.

“Malvinder Mohan Singh, Executive Chairman and Shivinder Mohan Singh, Non-Executive Vice Chairman have tendered their resignation from the directorships of the company,” Fortis Healthcare said.

The resignation is intended to free the organisation from any encumbrances that may be linked to the promoters, the letter said.

“In light of the recent High Court judgement upholding the plea of Daiichi Sankyo to enforce the arbitration award, we believe this is in the interest of propriety and good governance,” it said.

Updated Date: Feb 09, 2018 16:06 PM

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