Zee’s Subhash Chandra, Punit Goenka diverted public money, says SEBI

“In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons,” IANS quoted SEBI as saying in its reply to SAT.

Zee Entertainment Enterprises (ZEE) has written to SEBI that “continuous and repetitive” investigations on the same cause of action creates prejudice for the Company and Shareholders, and can potentially impact the merger process.

SEBI has given a no objection certificate (‘NOC’) to the composite scheme of merger in the matter of ZEEL and Sony Pictures Networks India Pvt. Ltd, which is one of the largest integrations of industry majors in the media industry and entails an incoming foreign direct investment of $1.7 billion into India.

In a letter to SEBI, Zee said, “Please note that the said merger is at an advanced stage post receipt approvals from various regulators (including SEBI, Stock Exchanges and CCI etc.) and the scheme is also approved by 99.9 per cent of the equity shareholders of ZEEL.”

Zee said, “It may also be noted that the transactions in the present matter pertain to the year 2019 and a detailed explanation has already been provided to Stock Exchanges and SEBI. 

“It is beyond our comprehension as to why the present matter is being reinvestigating/re-examining, when the cause of action pertaining to the matter is around 4 years old,” the company said.

“It is submitted that we were never privy to the loan arrangements between Borrower Entities and Yes bank or the loan amount involved. There was no privity of contract between the Yes Bank, ZEEL and the Borrowing entities. The misappropriation of ZEEL’s FD was the result of the unilateral action of YBL without any action on part of the ZEEL.

“It is submitted that ZEEL happens to itself be a victim of the misappropriation by Yes Bank. Therefore, pursuant to the misappropriation, ZEEL has taken every step to ensure that money is recovered and no loss is cause to the shareholders, thereby acting in the interest of the shareholders,” the company said.

Subhash Chandra and Punit Goenka have moved SAT against the SEBI order barring them from holding director positions or key management personnel in any listed company on alleged siphoning of funds from Zee Enterprises.

“The Appellant’s conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings. In Shirpur, we have also seen that the promoter group timed its offloading of shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur’s shares. It is ultimately the small retail investors who endured the downfall in share price,” SEBI added.

SEBI said as noted in the impugned order that the Appellants created a facade through sham entries to misrepresent to the investors as well as the regulator that the money had been returned by Seven Related Companies, whereas in reality, it was ZEEL’s own funds which rotated through multiple layers to finally end in ZEEL’s account. 

Updated: 18 Jun 2023, 06:43 PM IST