SEBI conducted a self-inspection to ascertain whether there was any routing of funds to the Indian securities market by the two Chandra brothers through bank accounts with UBS AG in violation of the provisions of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices). rules
The investigation period was from April 2006 to March 2008.
In the investigation report, the regulator alleged that United Corporate Parks PLC (UCP) is linked to Notice/Unitech.
It also alleged that Ajay Chandra was a non-executive director in UCP, while Unitech held 4.52 per cent stake in UCP through its subsidiary Nectrus Ltd – which had an account at the UBS Singapore branch.
Sebi then issued a show cause notice against the notices (Sanjay Chandra and Ajay Chandra) on May 3, 2023.
During the investigation, it was found that the account of Unitech Overseas, a foreign subsidiary of Unitech, was maintained at UBS Bank in Zurich.
In its 25-page order on Friday, Sebi said, “…the entire allegation in this case is that the notices (Sanjay Chandra and Ajay Chandra) had transferred funds from Unitech to its foreign subsidiary i.e. Unitech Overseas Limited and then these funds were transferred to Unitech’s other overseas subsidiaries. were transferred to subsidiaries, including connected/related entities i.e. UCP/its subsidiaries using UBS accounts in different countries”.
Sebi Chief General Manager G Ramar said in the order that these funds were eventually transferred from UBS accounts to Pluri, which were ultimately used by funds/FIIs like Sophia Growth Fund and Deutsche Bank Mauritius to directly or indirectly buy Unitech shares. Ltd. (DBML).
Pluri (Pluri Emerging Companies PCC) was incorporated in Mauritius as a private limited company by shares and is a protected cell company.
“I further note that neither there is any evidence, document or detail on record to establish that the transfer of funds by Unitech to Unitech Overseas Limited was subsequently transferred to Pluri nor any evidence brought on record in the IR There is material/facts/information (investigation report) to show that the source of investment in Unitech’s scrip is directly or indirectly linked to Unitech,” he said.
Further, there is no detail or evidence on record regarding fund transactions from Unitech/its subsidiaries to UCP or its subsidiaries, as alleged in the show cause notice, Ramer said.
“… I have not found sufficient evidence in the IR or in the material made available with the IR that the notices have indirectly fraudulently dealt in Unitech’s securities and used fraud and deceit in connection with the purchase and sale of Unitech’s securities or misrepresented the truth. and concealed the fact they knew about the fraudulent purchase of Unitech shares,” Ramer said.
In its order, SEBI decided to “dispose of the proceedings initiated against the notice” through a show cause notice dated May 3, 2023 “without issuing any directions”.
The order will come into effect with immediate effect. In January 2020, Unitech’s board was removed by the central government on the direction of the Supreme Court.
Both the brothers were serving as managing directors of the company before the board’s ouster.
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