Subhash Chandra Not Cooperating with Probe: SEBI
In a recent legal development, the Securities and Exchanges Board of India (SEBI) has pointed out that Subhash Chandra, the Chairman Emeritus of Zee Entertainment Enterprises Ltd, has showcased a lack of cooperation in an ongoing investigation. This investigation pertains to the alleged misdirection of funds from Zee Entertainment Enterprises, with SEBI’s legal team bringing this matter to light during a hearing at the Securities Appellate Tribunal (SAT).
The disagreement between SEBI and Chandra came to the forefront when SEBI’s counsel declared that despite numerous attempts to engage with Chandra, including formal summons and requests for relevant documents, the response from Chandra’s end has been less than satisfactory. “We will put this on record that, in fact, he [Chandra] has not been co-operating. SEBI has been writing to him, giving him summons and seeking information documents. Chandra has been saying that he will take 6-8 weeks,” remarked Darius Khambata, representing SEBI.
Chandra, on the other hand, has voiced his objections through his legal counsel, stating a significant delay on his part was to understand the full extent of the accusations and prepare a comprehensive response. “The order was prejudicial not only to my reputation but also to the companies with which I am associated. Virtually, I am being treated as a criminal,” Chandra expressed in his plea against SEBI’s directive issued in August.
This contentious issue stems from the order dated August 14, 2023, where SEBI implicated Subhash Chandra along with Punit Goenka, prohibiting them from assuming any principal managerial roles in listed entities. This directive was based on allegations concerning the diversion of funds, prompting SEBI to mandate the conclusion of its investigation within an eight-month period, setting a deadline in April.
However, in a turn of events on October 31, Punit Goenka was reinstated as the managing director and chief executive of Zee Entertainment. This decision came after SAT lifted a prior restriction imposed by SEBI, which accused him of misappropriating company funds.
The backdrop of these allegations also includes a report suggesting a significant financial discrepancy in the accounts of Zee Entertainment Enterprises. Recent findings indicate the possibility of a diversion exceeding $240 million or around ₹2,000 crore, an amount considerably larger than initial estimates by SEBI investigators. Zee Entertainment, however, has refuted these allegations and has countered by threatening legal action.
As the legal battle unfolds, SAT has accorded SEBI a 10-day window to file a reply in this matter. With the case set for further hearings, the industry is closely watching how the situation develops, particularly considering the implications it holds for corporate governance and management ethics within major listed entities.
