Below is a story in today's The Economic Times that appears to confirm previous reporting in the Indian financial press about the involvement of Gurinder Singh Dhillon, the guru of Radha Soami Satsang Beas (RSSB), in financial fraud.
I've boldfaced the mentions of Dhillon and RSSB.
The story restates what already was known. Money from Religare Finvest was diverted into shell companies, many or most of which were controlled by followers of RSSB. These were unsecured loans that reportedly went into the pockets of the Dhillon family. See two previous posts of mine on this subject.
It's difficult to tell what exactly happened here, but the following Bloomberg graphic I've shared previously seems to reflect the basic money flows mentioned in today's The Economic Times story.
The Singh brothers (and Sunil Godhwani) used shell companies to extract money from Fortis and Religare and funnel it into the Singh brothers' private holding company, RHC Holding. Unsecured loans then were made to Gurinder Singh Dhillon and his family, sometimes through other shell companies.
It's unclear why the money was never paid back.
There's been reporting that the Dhillon family invested the money they got into real estate deals that went bad. This would explain why the Singh brothers and Godhwani had to keep money circulating back and forth through shell companies to disguise the fact that money had gone out in unsecured loans that wasn't being paid back.
Such as: (1) Are investigators in India going to reveal who ended up with the money diverted into loans to shell companies, who orchestrated this financial fraud, and what the purpose of the fraud was?
(2) Assuming Gurinder Singh Dhillon and his family were the ultimate beneficiaries of much or all of this money, will Indian investigators have the political backing to delve into the Dhillon family's involvement in the illegal money transfers and hold them to account if they were active participants in the fraud?
Here's the story in The Economic Times.
NEW DELHI: Religare EnterprisesNSE -2.10 %’ former promoters Malvinder and Shivinder Mohan Singh had diverted public money from group entity Religare Finvest to shell companies and used it to “square off their personal liabilities”, the Delhi Police’s Economic Offences Wing (EOW) has said in its charge sheet against the brothers.
Executives at Religare Finvest, the group’s lending arm, had approved unsecured loans worth hundreds of crores to the shell companies within two hours of getting the proposals, even when these companies themselves had not sought the loans, the EOW said. The Singh brothers had joined the board of Religare Finvest in 2016 with the intention of diverting money to these 19 shell companies, it alleged.
The procedure adopted to peruse documents for approving loans was nothing but a “paper formality”, said the charge sheet filed last week in a local court, in a funds-misappropriation case filed by Religare Finvest. ET has seen the charge sheet.
Malvinder and Shivinder Singh had denied any wrongdoing on their part.
A “prominent feature” of the entire process was that these “shell/dummy companies” never made any request for loans, the charge sheet said.
It noted certain instances where the loan approvals were given almost immediately. On September 1, 2016, a loan of Rs 162 crore to Modland Wears Pvt Ltd was proposed at 3:14 pm and was approved at 4:36 pm — within 82 minutes. On the same day, another loan of Rs 165 crore to Artifice Property Pvt Ltd was approved in 103 minutes, it said.
The charge sheet alleged that after the Reserve Bank of India in 2014 redflagged abject lack of rigour deployed by Religare Finvest (RFL) in its corporate loan book, as opposed to strict scrutiny in SME loans, it resorted to “Google check”, as well Board of Industrial and Financial Reconstruction, Registrar of Companies, Cibil and KYC checks. “But no assessment of repayment capacity was done,” it said.
The agency said the only “precaution” it took was that the credit notes used to read “the corporate is known to the promoters of Religare and based on their comfort, we are proposing the deal”. The loans were cleared on "verbal instructions" of the promoters, it added.
Filing the charge sheets against the Singh brothers, former Religare chairman Sunil Godhwani and two others, the EOW said “despite being a listed company, no corporate governance norms were adhered with respect to the disbursal of loans”.
The EOW has questioned directors of the 19 shell/dummy companies named by it. Five of the directors told EOW that they were “namesake” directors and that they all were “followers of Radha Soami Satsang Beas and old acquaintance of late Parvinder Singh, father of Singh brothers”, the charge sheet said.
The “dummy” directors further claimed that they “signed the documents which were sent to their house through a messenger/employee of promoters at the year end and received salaries from the companies”, the EOW said. They also said none of them were signatories of the bank accounts of the companies.
According to the charge sheet, these directors claimed that all the 19 entities “were controlled and owned/operated by Malvinder and Shivinder Singh through their employees of RHC Holding Pvt Ltd (owned by the brothers) and its subsidiaries”, and that the companies were “not separate entities and were operating from the office of RHC Holding…”
“Malvinder and Shivinder used shell/ dummy entities along with the management of REL (Religare Enterprises) and RFL to divert the money from REL to their holding company, by adopting circuitous transaction to conceal the fake transactions and to make them appear genuine,” the EOW said.
During his questioning, Malvinder Singh told EOW that "Sunil Godhwani and his team at Religare managed and ran the affairs of RHC and its subsidiaries, decisions of money movement between REL, RFL, Babaji (Radha Soami Satsang chief Gurinder Singh) entities and RHC group entities".
Fastening entire responsibility on Godhwani and his team for "mismanagement" of RFL, Malvinder Singh told the EOW that "the management changes at REL in July 2016 were done at the direction and instructions of Babaji”.
Malvinder Singh has further alleged that "Religare and its subsidiaries owe money to RHC Holdings and not the other way around. Fern Healthcare, Modland (which are described as shell companies by the EOW) owe money to RHC Holdings and its subsidiaries and were fraudulently made part of the RHC Group without any diligence, valuation or any board approval. This was done by Shivinder Singh to shield Babaji and his family members to personally owe over Rs 1,000 crore to these entities," he has alleged.
Shivinder Singh, on the other hand, has denied the allegations stating that he took retirement from active life and went to Radha Soami Satsang Beas in 2016. He said he was completely unaware of the operations at REL and RFL.