THE controversial trails of brothers Malvinder Singh and Shivinder Singh, who were previously the major shareholders of Fortis Heathcare Ltd, dates back to more than a decade ago when they sold their family’s stake in a pharmaceutical company.
Malvinder and younger brother Shivinder sold their 35% in Ranbaxy Laboratories in 2008 to Daiichi Sankyo, Japan’s third largest drug maker for about US$2.1bil.
What Daiichi did not know during the acquisition is that the brothers withheld information that Ranbaxy, which was founded by their grandfather, was being investigated by the health authorities in the United States for fabricating test results.
The probe was initiated following a report by a whistleblower, who then resigned from the company after being accused of browsing pornographic websites, with evidence allegedly planted by Ranbaxy.
Malvinder was the former chairman and CEO of Ranbaxy.
It is through the proceeds from the Ranbaxy sale that the Singh brothers purchased a 23.9% stake in Parkway Holdings Ltd for US$959mil two years later via its vehicle Fortis Healthcare.
They increased the shareholding subsequently to 25.3% as they planned to build a global healthcare chain. Eventually, they sold the block to Parkway Group, which was already under the control of Khazanah Nasional Bhd, following a lengthy corporate battle.
Malvinder and Shivinder focused on Fortis Healthcare Group, which became a target of takeover after it ran into financial distress. In November last year, IHH HEALTHCARE BHD, which took over the listing from Parkway, acquired a 31.1% stake in Fortis after a bidding process.
Under the takeover, IHH has to make an offer for an additional stake of up to 26% in Fortis. Towards this end, IHH even placed a deposit of RM1.97bil with the regulators in India for the exercise that will increase its stake to up to 57.1%.
The slew of problems began last year when Daiichi sought a court order through the Delhi High Court to block IHH’s further acquisition of more interest in Fortis.
This is in relation to Daiichi’s move to enforce a decision of an arbitration tribunal in Singapore where Malvinder and Shivinder are to pay them 35 billion ruppes (RM2.07bil) in damages.
Ranbaxy recorded losses after the sale by the Singh brothers and following a two-year investigation, the US Food and Drug Administration banned 30 drugs made at two Ranbaxy plants due to fabricated test results.
This caused Daiichi to severely write down its investment in Ranbaxy.
Up until yesterday, Malvinder and Shivinder have yet to settle the amount and the Supreme Court in New Delhi warned the brothers that it will send them behind bars for disobeying the orders to pay Daiichi.
In February last year, they were also accused of siphoning 5 billion rupees (RM295mil) cash out of Fortis without board approval.
Just a month prior, the brothers were slapped with a lawsuit from an investor, accusing the brothers of siphoning 18 billion rupees (RM1.06bil) from Religare Enterprises Ltd, a financial services firm then owned by them.
As if the ongoing drama was not enough, the brothers took their feud public in September last year for alleged “oppression and mismanagement” of their companies.
Shivinder accused Malvinder and former Religare Enterprises Ltd chairman Sunil Godhwani as the individuals to be blamed for “a systematic undermining” of the interests of the companies and their shareholders.
He then said in a statement that he was disassociating from Malvinder as a business partner and will be pursuing an independent path going forward, adding that he can no longer be party to activities of which transparency and ethics are continuously and consistently negated.
In December, Malvinder alleged that his younger brother assaulted him and in February this year, he filed a criminal complaint against Shivinder and several others claiming that they made death threats and committed fraud.
Malvinder alleged that Shivinder siphoned funds from the family holding company and diverted them to spiritual guru Gurinder Singh Dhillon of Radha Soami Satsang, hoping that he will one day earn the status of spiritual head.
It is quite the irony because Shivinder had once told Forbes in an interview that he once fired people for stealing as little as US$125 (RM507).
Fortis, where the Singh brothers placed their dreams to build a global healthcare network, had requested regulators Securities and Exchange Board of India in February to initiate legal proceedings and to arrest Malvinder and Shivinder to recover 4 billion rupees (RM236mil) that the duo fraudulently siphoned from the company and related entities.
We're sorry, this article is unavailable at the moment. If you wish to read this article, kindly contact our Customer Service team at 1-300-88-7827. Thank you for your patience - we're bringing you a new and improved experience soon!
What do you think of this article?