Markets regulator SEBI, in its reply to the Securities and Appellate Tribunal (SAT) on a plea by Zee Entertainment Enterprises Ltd, has sought immediate action against the promoters in the alleged fund diversion case to protect the management, investors and other stakeholders. In its affidavit, the Securities and Exchange Board of India (SEBI) pointed out that the applications made by Chairman Emeritus Subhash Chandra and Managing Director and CEO Punit Goenka on July 6, 2022 said that “there was no urgency and that is the issue”. The contents of the show cause notice dated July 6, 2022 are totally false and misleading.” SEBI further said that “not only violations have been committed but several false disclosures and submissions of statements have also been made to cover up such wrongdoings.”
“In the present case, we are faced with a situation where the Chairman Emeritus and Managing Director and CEO of this large listed company are involved in various schemes and transactions through which huge amount of public money belonging to the listed companies is diverted to private entities owned and controlled by these persons,” Sebi said in the affidavit to SAT. On June 15, SAT directed them to reply to SEBI’s submission on or before June 19, when the tribunal will take up the matter for final disposal.
In an interim order dated June 12, Sebi barred Essel Group Chairman Subhash Chandra and Zee Entertainment Enterprises Ltd (ZEEL) MD and CEO Punit Goenka from holding the position of director or key managerial personnel in any listed company, which It was for misappropriation of media funds. firm. Both Chandra and Goenka moved the SAT to stay the SEBI order citing injustice. SEBI also said that the appellants had not placed on record any material to show that they were prejudiced by not being given a personal hearing before the passing of the interim order.
The regulator said it was ready to hold an urgent hearing for the appellants “at the earliest”. In the affidavit, Sebi alleged that the promoters created an alibi through fake entries to give false information to investors and the regulator about repayment of Rs 200 crore by seven related parties to ZEEL. SEBI submitted that the present investigation was initiated following the rejection of the settlement application filed by ZEEL in the Essel group-company Shirpur Gold Refinery (Shirpur) matter, on which the regulator had issued an interim order in April.
“In Shirpur, we have also observed that the promoter group has given time to offload its shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur shares. It is ultimately the small retail investors who have borne the brunt of the fall in the share price. price,” the market regulator said. Sebi said the Shirpur case reflects a fictitious scheme with a set of bogus transactions, intended to mislead and facilitate a circuitous movement of funds. SEBI initiated the process of obtaining bank details from various banks involved and traced the source of funds used by the related party to ‘repay’ ZEEL.
On examining the counter-parties of such transactions as well as the transactions shown in the bank statements, SEBI found certain glaring irregularities. “While ZEEL claimed to have received repayment of money from related parties on account of adjustments by Yes Bank, SEBI found that such money originated from ZEEL itself and/or group companies of Essel Group (which includes ZEEL) Hence, effectively said the regulator, ZEEL funded its own repayments. In fact, Sebi said, a large number of entities that were used as a conduit for layering and passing-through of funds , as well as overlap with entities involved in the Shirpur investigation.
“These entities are part of the Essel Group, either by way of shareholding, control, directorship, or commonality in the name of the group. Further, these entities are owned by the appellants and their family members.” In November 2019, two independent directors, Subodh Kumar and Niharika Vohra, resigned citing alleged weak corporate governance and appropriation of FDs to pay off promoter loans. Meanwhile, the National Company Law Tribunal deferred till June 26 the hearing on the possible merger of ZEEL with Sony Pictures Networks India.
Read this also | SEBI rejects allegation of probing Adani Group since 2016, calls it ‘factually baseless’
Read this also | Adani Group-Hindenburg report: SC grants SEBI three months’ time, next hearing on May 15