Religare Enterprises (REL) Independent Directors Accuse Burmans of Fraud and Violations, Petitioning Regulators Sebi, IRDAI, and RBI. Burmans, the promoters of Dabur, initiated an open offer in September to secure control of the company.
The Burmans have responded to these allegations in a statement reported by The Economic Times, expressing their surprise and disappointment while characterizing the claims as "false, frivolous, and defamatory." They believe these accusations are an attempt to divert attention from trades made by an unidentified REL executive.
Sebi has also requested REL to furnish supporting evidence and documents for the allegations outlined in an October 18 letter. The regulator has also solicited a response from JM Financial, the managers of the open offer, as detailed in the report. JM Financial has denied any involvement in the alleged wrongdoing.
Until 2018, Religare (REL) was under the control and ownership of the Singh brothers, Malvinder and Shivinder Singh, formerly associated with Ranbaxy and Fortis. However, they were later convicted and sentenced to jail for diverting funds from their companies, resulting in the loss of their control over REL. Presently, the Burman family, holding the largest share in the company with a market capitalization of Rs 7,415 crore, is the principal shareholder.
However, the REL board has taken a different stance. According to the report, independent directors of REL have alleged that the Burmans have violated significant regulatory obligations, posing potential harm to the company. The letter outlining these concerns was addressed to the Chairperson of SEBI, the Governor of RBI, and the Head of IRDAI.
The independent directors have accused the Burman family of colluding with the Singh brothers, citing a pending fraud case involving Dabur India Chairman Mohit Burman. They have also raised questions about the source of funds used for the acquisition and have expressed concerns about market manipulation. Furthermore, the independent directors have accused the Burman Group of being associated with multiple "frauds and financial improprieties" currently under investigation by various regulatory authorities.
The spokesperson representing the Burman family asserted that the allegations were prompted by their efforts to highlight certain trades made by an unnamed executive. The spokesperson emphasized that they fully comply with all the established "fit and proper criteria."
Additionally, the independent directors raised concerns about JM Financial's involvement in multiple roles, including acting as a lender for the open offer transaction and serving as a professional advisor for the M&A deal. In response, JM Financial has stated that there is no conflict of interest.
