ED unearths $400-million fund diversion at Religare Enterprises

Shivinder Singh (left) with Malvinder Singh (right)
The Enforcement Directorate (ED), which is probing the money-laundering charges against Religare Enterprises former promoters Malvinder Mohan Singh and Shivinder Mohan Singh, has established a diversion of $400-million funds to a subsidiary in Mauritius and then to a Jersey-based entity, sources in the know said. 

Religare Enterprises’ wholly-owned Indian entity Religare Capital Markets (RCML) diverted the amount to its Mauritius-based subsidiary Religare Capital Markets International and later to NCM Ltd, a company in Jersey, between 2010 and 2016, the sources pointed out.

The ED is learnt to have summoned the Singh brothers along with close associate N K Ghoshal and former Religare chief Sunil Godhwani last week. 

“They were summoned and questioned after we  searched their residences and collected money trails related to their offshore holdings along with several documents of foreign assets. The statement has been recorded, and if required, they would be questioned again,’’ said an official privy to the development.  

The investigation into the case revealed that Singh brothers and their spouses are shareholders of Jersey-based NCM, the official said.  

When contacted, the RHC Holdings spokesperson said, “We are cooperating with all the investigative agencies and we believe that truth will come out.”

ED is probing the 19 beneficiaries including RHC Holdings, which is jointly controlled by Singh brothers through Shivi Holdings and Malav Holdings, under the anti–money laundering laws. According to ED, 19 entities have wilfully defaulted on the loan, amounting to Rs 2,397 crore as principal amount and Rs 415 crore as the interest amount given by its non-banking finance company ReligareFinvest Limited (RFL). 

These entities never repaid the loan and diverted the funds through a complex web of interconnected transaction, according to the official cited above. 

ED is believed to have sought assistance from its counterparts in Mauritius and Jersey to understand the complex corporate structure that may have facilitated fund diversion. 
The investigators have reached out to Ghoshal’s firm Arch Finance, an alleged beneficiary of a portion of the diverted funds. The probe agency has gathered that as many as 50 shell companies based in Kolkata were being used to do the hawala transaction.  Sunil Godhwani, former managing director of Religare Enterprises, and Henamt Dhingra, director of RHC Holdings, are in the list of beneficiaries. 

It is alleged that ReligareFinvest offered unsecured and high-value purported loans to shell companies and related entities of the Singh brothers. The large loans were allegedly being disbursed at a short notice and without adequate documentation on instructions from Singh brothers and Sunil Godhwani. Some of the loans were also extended to entities controlled by Ghoshal. 

ED had registered a case under the Prevention of Money Laundering Act (PMLA) last month in the matter. This had  followed the first information report (FIR) of the Economic Offence Wing of Delhi Police in March. 

According to the police report, ReligareFinvest had initiated legal proceedings under the Insolvency and Bankruptcy Code against 19 entities before the National Company Law Tribunal (NCLT). During the court proceedings, only seven companies had filed replies. 

Meanwhile, the ED is also studying the findings of the Securities and Exchange Board of India (Sebi) in the same matter. 
The market watchdog had concluded that a large chunk of the funds was diverted and ultimately parked with RHC Holdings, which in turn utilised the same for debt repayment of mutual funds. 

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