ZEE fund diversion: Stock in news as Sebi may question Subhash Candra, Punit Goenka, says report

Even as ZEE Entertainment Enterprises Ltd (ZEE) suggested that rumours pertaining to accounting issues in the media firm are incorrect, baseless and false, a fresh report by the ET quoting sources suggested the market regulator Sebi would be questioning the top ZEE management including founder Subhash Chandra, chief executive and managing director Punit Goenka, the chief financial officer, as well as current and past board members, on the alleged fund diversion at the media firm.

To recall, Sebi's initial findings in June last year suggested that Rs 200 crore from the company was diverted through related party transactions. A report by Bloomberg this week suggested suggested that Sebi has found $240 million or Rs 2,000 crore in fund diversion in the accounts of ZEE, much higher than Sebi's initial estimates.

"Pursuant to the SAT order dated October 30, 2023 granting relief to the current Key Managerial Personnel (KMP), the company has been in the process of providing all the comments, information or explanation requested by SEBI, and has extended complete co-operation on all aspects. In this regard, the Company is not aware of any order wherein Sebi has recorded any finding and therefore it has been falsely reported in the abovementioned news articles," ZEE clarified on Wednesday on a Bloomberg report.

The Bloomberg report suggested that the Rs 2,000 crore amount that is found missing is not final and may change after Sebi reviews the responses from the company executives. The regulator has been calling in senior officials at ZEE including founders, Subhash Chandra, his son Punit Goenka and some board members to explain their stance, the Bloomberg report earlier suggested.

In its Q3 earnings, ZEE said Sebi had passed an ex-parte interim order dated June 12, 2023 and confirmatory order dated August 14, 2023, against one of the KMP of the company for alleged violation of Section 4(1) and 4(2)(f) of SEBI (Prohibition of Fraudulent and Unfair Trade practices (FUTP) relating ta Securities Market) Regulations, 2003

On October 30, Securities Appellate Tribunal (SAT) set aside the above order passed by Sebi granting investigation. relief to the KMP, The SAT order also directed that the will continue with the investigations.

"Pursuant to the above, SEBI has issued summons and sought comments, information, explanation from company, its subsidiary, certain directors (including former directors) and KMPs who have provided or are in the process of providing the information requested, The company had also received a follow-up communication from the Ministry of Corporate Affairs ('MCA') for the ongoing inspection under section 206(5) of the Companies Act, 2013 against which the company had submitted its response. The management has informed the Board that based or its review of records of the company/ subsidiary, the transactions (including refunds) are relating were against consideration for valid goods & services received," ZEE said in its results note.

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