Whistleblower Files 150-Page Complaint with SEBI about Sudhir Valia Group, Dilip Shanghvi and Sun Pharma
In a sensational 150-page document, a whistleblower has alleged numerous irregularities against Sun Pharma, its main promoter Dilip Shanghvi and his brother-in-law Sudhir Valia, Mr Valia’s independent financial operations, Fortune Financial and Investment Trust of India and Dharmesh Doshi, an associate of Ketan Parekh who has been convicted of wrongdoing in the stock market scam of 2001.
Moneylife has a copy of this document filed with the regulator in mid-September. Copies have been marked to the chairman of the Securities and Exchange Board of India (SEBI) Ajay Tyagi and whole-time directors Madhabi Puri Buch, G Mahalingam and Ananta Barua. Sun Pharma, in an official response to Moneylife has said that it has not received any query from the regulator so far.
Separately, a note by Australian brokerage house Macquarie, which raised several questions about the practices by Sun Pharma and its curious connections with tainted entities, has already gone viral on social media. The Economic Times has since reported some of these along with a denial by Sun Pharma. When we shared the screenshots of the whistleblower’s note, the brokerage note and asked about the whistleblower’s document, sun Pharma's response was as follows:
1. "We have not been contacted by SEBI with regards to any such whistle blower complaint”
2. “The points raised pertain to historic events, some of which are dated as far back as 10-15 years. Certain points raised are incomplete and have been presented in a negative manner. The supporting information to the points has been sourced from public domain and hence this information/data is already available in public domain. We believe we are in compliance with all the legal/regulatory provisions applicable to us.”
The document sent to SEBI goes far beyond the Macquarie note. It contains sensational allegations of insider trading, using State machinery to arm-twist target companies, using funds raise by opaque foreign currency convertible bonds, booking notional losses to save on tax payment among the charges.
In this article, we are only mention that a whistleblower document has been sent to the regulator. We will leave the more sensational allegations for the regulator to investigate.
The whistleblower now names a host of foreign entities such as Bomin Finance Ltd, First International Group PLC, Orbit Investments PLC, Sun Global Investments Ltd, Orange Mauritius Investments Ltd., Hypnos Fund Limited, Elm Park Fund Ltd, Asia Advantage Fund, ITF Mauritius, etc, as being involved in questionable transactions in the Indian equity market.
He writes, “These are some direct links, and some others which are carried out through relationship arrangements. For example, I will deal on your behalf and you will deal on my behalf. We will settle our account at the end of year in net negative or net positive through international markets. There are other arms in International market as well which I am not covering here.”
Coming out of the shadows of Dilip Shanghvi, Sudhir Valia has charted an independent course for himself through a series of acquisitions of brokerage firms, investment banking firms, advisory firms such as Fortune Financial Services India Ltd (FFSlL), Inga Capital and Antique broking and Investment Trust of India (ITI). All these vehicles are allegedly used by the group for various questionable financial transactions, alleges the whistleblower.
The 150-page document has names, phone numbers, bank account statements and complex organisation charts of hundreds of companies, foreign investors and individuals that are acting in concert.
In the covering letter to the SEBI chairman and the whole-time member, the whistleblower mentions that “for me to reach to this level of detailed letter to you along with the evidences gathered over a period, has taken an extraordinary level of efforts at my end and weeks of data compilation. Further it has added lot of risk to my family, my life and my family’s future."
The whistleblower claims to be “very closely connected to the people mentioned… My association with this set of people has been for more than 23 years now and I am directly working with them for 15 years and currently as a senior executive with the group. In my career with them, I have handled their Romania, Israel, USA and Mauritius operations directly.”
He claims not to be a beneficiary of the operations described “regularly drawing salary as my primary income and has never had anything beyond that during my entire tenure. The very reason I have decided to share this is because there are some deals that have gone bad and to cover them up from difficult questions coming along, now the management is asking the professional staff to front that event which I am not ready to do. Therefore, over a period of 6 months, I have gradually gathered all relevant evidences to present my case and bring out a rightful conclusion to this episode.”
Macquarie, in its note to clients had said, “Sun Pharma, its auditors, its subsidiaries and interesting links to certain individuals, FPI entities, market manipulation cases, lending activity.” It raised questions about who audits the Sun Pharma subsidiaries including Green Eco Development, Fastone Mercantile, etc. The auditor apparently is Valia and Timbadia whose partner Timbadia had been involved in a stock marketing rigging case.
The note also asks why Sudhir Valia’s own chartered accountancy firm had been auditing the firm he controls, Lakshdeep Investments, till 2017. The firm now shows Sanjay Valia as the proprietor, who had been involved in a price manipulation case of a stock Maa Leafin & Capital and barred from the securities markets in 2002. https://www.sebi.gov.in/satorders/pareshparekh.html
The Macquarie note also questions why Sun Pharma appointed a “tin-pot financial services firm, Jermyn Capital,” to manage its landmark FCCB transactions from 2004-2007?
“Sun Pharma raised $275m in the first tranche of FCCBs. Let’s just mull this over for a minute. In the biggest fund raising transaction, Sun Pharma hired a small shop based out of London to co-manage the issue. Even global brands like Macquarie struggle to get deals. That’s not it though… this Indian arm of this entity was found to have links with Ketan Parekh and Dharmesh Doshi (two of the biggest stock KNOWN market manipulators in India). As the SEBI order states: There are linkages between Jermyn Capital LLC, Jermyn Capital Partners Plc (hereinafter referred to as ‘Jermyn Plc’) and Dharmesh Doshi/Ketan Parekh.”
With his supposedly intimate knowledge of the operations of the group, the whistleblower claims to have the answer. “When the (2001 Ketan Parekh) scam was out and Dharmesh Doshi fled to London, UK, he would have never gained strength without the active assistance of Dilip Shanghvi who awarded the work of two to three major rounds of Foreign Currency Convertible Bonds of Sun Pharma during that period between 2002 to 2007 to Jermyn Capital LLC controlled by Doshi.” It is a fact that one of the promoter entities of Sun Pharma had previously lent to Ketan Parekh. https://indiankanoon.org/doc/128780206/?type=print