ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter
Companies

Fortis brothers ordered to repay cash 'diverted' from hospital group

Indian regulator calls for deeper probe after saying transfers were fraudulent

Fortis Healthcare is under investigation for alleged regulatory lapses surrounding the transfer of funds to companies linked to founders Shivinder Mohan Singh and Malvinder Mohan Singh.   © Press Trust of India

MUMBAI -- Fortis Healthcare's founder brothers, along with eight related companies, have been ordered by an Indian regulator to repay 4.03 billion rupees ($55 million) that was allegedly "diverted" from the company in a "fraudulent manner."

Wednesday's decision by the Securities and Exchange Board of India said that brothers Malvinder Mohan Singh and Shivinder Mohan Singh must make the payment with interest to Fortis Healthcare Ltd., or FHL, within three months.

The securities authority also called for a deeper probe at a time when Fortis Healthcare is in the final leg of regulatory approval for its takeover by Malaysian hospitals group IHH Healthcare. In July, the Fortis board accepted IHH's bid of 40 billion rupees for control of the Indian company.

"A detailed investigation of the entire scheme employed in this case is necessary to find out the role of each entity in the alleged routing of funds," the regulator said.

"However, pending a detailed investigation into the entire fraud involving diversion of funds from FHL," the regulator said, "an urgent need is felt" to issue an "ex-parte order to protect the interests of shareholders of FHL and to prevent any further deterioration of funds/assets of FHL."

The regulator also barred the Singh brothers and the eight entities -- Shivi Holdings, Malav Holdings, Religare Finvest, Best Healthcare, Fern Healthcare, Modland Wears, Fortis Hospitals and RHC Holdings -- from disposing of assets or diverting any funds without prior permission from the board, except to make the repayment or meet daily operational expenses.

Malaysia's IHH was particularly interested in the Indian health care chain as it served their change in strategy to acquire existing hospitals rather than building new ones.

The acquisition also should benefit from the rapid growth anticipated in India's health care sector under Prime Minister Narendra Modi's "Modicare" program, which may improve conditions for the poor. India needs an additional 1.8 million beds to achieve two beds per 1,000 people by 2025, as well as 1.54 million new doctors.

Japanese pharmaceutical company Daiichi Sankyo has asked the regulator to block the Fortis sale, claiming it would violate court orders by including the assets of the hospitals. Daiichi Sankyo endured an acrimonious split in 2015 with Ranbaxy Laboratories, which is linked to the Singh brothers.

The Singh brothers resigned from the Fortis board in February after the Delhi High Court upheld the 35-billion-rupee international arbitration award in favor of Daiichi Sankyo.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends January 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media