Religare Enterprises (REL) independent directors have levelled allegations of fraud and other breaches against the Burmans with regulators Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority of India (IRDAI) and Reserve Bank of India (RBI). The Burmans, promoters of Dabur, had made an open offer in September for the acquisition of the firm’s control.
According to a report in The Economic Times, the Burmans said in a statement that they are surprised and disappointed at these allegations, which are “false, frivolous and defamatory”. The spokesperson said that the accusations are meant to deflect attention from trades made by an unnamed REL executive.
Sebi has also asked REL to provide evidence and documents to back the allegations made in an October 18 letter. It also sought the response of JM Financial, who are the managers of the open offer, as mentioned in the report. JM Financial has denied the allegations and its involvement.
REL was founded and controlled till 2018 by brothers Malvinder and Shivinder Singh of Ranbaxy and Fortis, till they were sentenced to jail time for siphoning off funds from their companies, which led to them losing control of REL. Currently the single-largest shareholder of the company with Rs 7,415 crore market-capitalisation is the Burman family.
But the board has now turned against them. As per the report, REL’s independent directors have alleged that the Burmans are in material breach of regulatory obligations, which might harm the firm. The letter was marked to SEBI chairperson, RBI governor and the head of IRDAI, the report stated.
The directors have accused the Burman family of colluding with the Singh brothers, mentioned a pending case of fraud against Dabur India Chairman Mohit Burman, questioned the source of funds used for the acquisition, and market manipulation. The independent directors have accused the Burman Group of being involved in various "frauds and financial improprieties” which are under investigation by different statutory authorities.
The Burman family spokesperson said that the allegations are a response to them drawing attention to some trades by an unspecified executive. The spokesperson said that they satisfy “all norms of fit and proper criteria”.
The independent directors further accused JM Financial of donning "multiple conflicting roles", including the role of a lender to the open offer transaction and a professional advisor to the M&A deal.
JM Financial responded that there is no conflict of interest.
Also read: Religare Enterprises shares in focus amid report of fraud allegations against Burmans