Subhash Chandra, Punit Goenka Diverted Public Funds, Says SEBI
SEBI accuses Zee executives of diverting public funds to private entities
The Securities and Exchange Board of India (SEBI) in its reply filed to an appeal by Subhash Chandra, the Chairman Emeritus, and Punit Goenka, the Managing Director and CEO of the company, has accused them of diverting public funds to private entities, news agency IANS reported. The Securities Appellate Tribunal (SAT) had on June 15 given SEBI 48 hours to file its reply.
In its response, SEBI has stated, "In this particular case, we are faced with a situation where the Chairman Emeritus and the Managing Director and CEO of a prominent listed company have been involved in various schemes and transactions that have led to the diversion of significant amounts of public funds, belonging to listed companies, to private entities controlled and owned by these individuals."
The regulator, in an interim order, had earlier prohibited Subhash Chandra, the Chairman Emeritus of Essel Group, and Punit Goenka, the Chief Executive Officer of Zee Entertainment Enterprises Ltd., from holding directorial or key managerial positions in listed companies.
According to SEBI's order issued on June 12, both individuals had exploited their roles as directors or key managerial persons within a listed company to divert funds for their personal gain.
The response further revealed that the individuals in question have violated regulations, issued false disclosures, and submitted misleading statements to conceal these wrongdoings, SEBI has said in its response.
It also mentioned an instance related to Shirpur Gold Refinery Ltd., where the promoter group strategically offloaded shares in the open market to evade the impact of a decline in the company’s share value. Ultimately, the small retail investors faced the consequences of the plummeting share prices, according to SEBI's statement.
As per the filings before the SAT, Zee Entertainment has expressed concerns to SEBI regarding the potential negative impact on the company and its shareholders due to the "continuous and repetitive" investigations on the same matter, which could affect the ongoing merger process with Culver Max Entertainment Pvt. (Sony Pictures)
In a letter addressed to SEBI, Zee highlighted that the merger is in an advanced stage, having received approvals from various regulatory bodies, including SEBI, stock exchanges, and the Competition Commission of India (CCI). Additionally, Zee emphasized that 99.9% of its equity shareholders have already approved the merger scheme.
Zee further stated that the transactions under scrutiny in the current matter took place in 2019, and detailed explanations have already been provided to both the stock exchanges and SEBI.
The company expressed bewilderment as to why the present matter is being reinvestigated or reexamined, considering that the cause of action is approximately four years old, as per IANS report.
