Shivinder and Malvinder Singh transferred unsecured loans, reveals ED probe
The Enforcement Directorate (ED)’s initial investigations against Fortis Healthcare founders Shivinder Mohan Singh and Malvinder Mohan Singh have revealed a “systematic evergreening of loans” by Religare Finvest Ltd so that the loans were not categorised by the banks as non-performing assets (NPAs).
Religare Finvest is an arm of Religare Enterprises Ltd, promoted by the Singh brothers.
In its remand paper, submitted in court on Friday while taking custody of Malvinder Singh, ED claimed that between 2006-07 and 2017-18, on the instructions of Sunil Godhwani, ex-chairman and managing director (CMD), of Religare Enterprises, RFL or other entities known to the Singh brothers transferred unsecured loans worth ~2,397 crore in the companies owned and controlled by their long-time associate Narendra Kumar Ghoshal.
At least five out of 22 companies which received these loans “were introduced by Ghoushal and his close associates” and they defaulted to the tune of ~477.4 crore, ED stated in the remand paper, a copy of which has been reviewed by HT.
Shivinder Singh, Malvinder Singh, Godhwani, former Religare Finvest managing director Kavi Arora and former Religare Group chief financial officer Sunil Saxena were arrested by Delhi Police in the second week of October for allegedly causing wrongful loss to RFL.
ED arrested Malvinder Singh and Godhwani on Thursday. Taking their custody in Tihar jail on Friday, ED’s special public prosecutor Nitesh Rana informed the court, specially assembled inside the prison, that the Singh brothers caused RFL to give unsecured, purported high-value loans to their shell companies and related/known entities.
The companies listed by ED include A&A Capital Services Pvt Ltd, which received ~100 crore; Abhiruchi Distributors Pvt Ltd, which received ~92.4 crore; Ad Advertising Pvt Ltd (~100 crore), Annies Apparel Pvt Ltd (~100 crore); Artifice Properties Pvt Ltd (~164 crore), Best Health Management Pvt Ltd (~40 crore), Bharat Road Network Ltd (~50 crore), Devera Developers Pvt Ltd (~40 crore), Fern Healthcare Pvt Ltd (~150 crore), Gurudev Financial Services (~100 crore), Modland Wears Pvt Ltd (~155 crore), Platinum Infrastructure Pvt Ltd (~109 crore) and Religare Comtrade Ltd (~125 crore).
Other companies identified by ED are Religare Enterprises (~185 crore), Rosestar Marketing Pvt Ltd (~149 crore), Star Artworks Pvt Ltd (~150 crore), Tara Alloys Ltd (~85 crore), Torus Buildcon Pvt Ltd (~ 5 crore), Tripoli Investment and Trading Company (~150 crore), Vitoba Realtors Pvt Ltd (~35 crore), Alga Management Consultancy Pvt Ltd (~150 crore) and Zolton Properties Pvt Ltd (~160 crore).
Detailing the modus operandi used by the Singh brothers, ED said: “These loans were given by the employees and management of RFL under the directions of management team of RFL led by Sunil Godhwani (ex-CMD of Religare Enterprises Ltd). They were used to repay earlier loans taken by entities associated with promoters under CLB (corporate loan book). It was revealed that there was systematic evergreening of loans such that new loans were given at regular intervals so that existing loans could be repaid within the prescribed period so as to avoid categorisation as NPAs of those existing entities.”
The agency found that “a complex maze of transactions was used to transfer the money in these entities” and was ultimately “siphoned off for various purposes”. “In some cases, the existing loans were repaid on the same date as the date of disbursement of new loans under CLB. Therefore, to clear existing outstanding towards RFL, this fraudulent modus operandi of sanctioning fresh loans and layering through multiple transactions was used,” ED added.
ED has also claimed that in many cases, the documentation for loans were “created only subsequently and ante-dated, thus forged”.
In all, 115 entities belonging to Singh brothers and their aides were funded through the CLB in 10 years and total amount funded was ~47,968 crore.
Malvinder Singh’s lawyer Manu Sharma said: “ED’s job is to investigate whether any property or asset has been created by a person in a scheduled offence. It [ED] is yet to even establish if there were any proceeds of crime [in this case]. It doesn’t know its job.”
DP Singh, who appeared for Shivinder Mohan Singh in the bail matter in the Delhi Police case, said he could not comment on ED charges.