ED Summons Dabur Chief Mohit Burman, Others In Religare Open Offer Money Laundering Probe

The Enforcement Directorate, ED has recently summoned Dabur India chairman Mohit Burman as part of its investigation into an alleged money laundering case related to the open offer made by the Burman family to the shareholders of Religare Enterprises (REL).

Along with Burman, three independent directors of REL’s subsidiary Care Health Insurance and the manager of the open offer have also been called for questioning, according to individuals familiar with the matter.

Although most of the individuals summoned did not appear in person, their representatives were present. The initial round of questioning by the federal probe agency aims to gather their statements, which will then be analyzed to evaluate the situation further.

“The probe has commenced, and since there are allegations and counter-allegations, those involved in the case have been summoned,” one source explained. “Their statements are being reviewed to determine if there is a case of money laundering and whether the allegations made by the complainant in the predicate offense are substantiated.”

What is the Money Laundering Probe?

The main allegation, brought forward by complainant Vaibhav Gawli, is that funds allegedly siphoned from Religare Finvest, a non-banking financial company (NBFC) of the Religare Group, were channeled into companies linked to the open offers.

An official cited added that this aspect of the case is currently under scrutiny. This marks the first time a probe agency has summoned all stakeholders in the ongoing Religare-Burman dispute.

While the Economic Offences Wing (EOW) of the city police is also investigating the alleged wrongdoing, it has yet to summon any of the accused for questioning.

The ED has recorded the statement of REL shareholder Gawli, who initially filed the complaint with Mumbai police. The 14 individuals named in his complaint include Burman, his family members, and former Religare promoters Malvinder and Shivinder Singh.

Gawli has accused the Dabur’s Burman family of making false claims and misrepresentations in their open offer to REL shareholders, allegedly manipulating them into tendering their shares.

He further alleges that the individuals named in the first information report (FIR) failed to disclose all the risk factors associated with the open offer and withheld crucial information.

According to Gawli, this fraudulent attempt resulted in economic losses for shareholders like himself. He claims to have purchased REL shares on October 13, 2023, at ₹239 per share, after the offer was announced on September 25, 2023.

The REL board, initially supportive of the offer, later turned hostile. “The complainant, in his statement before the ED, has reiterated the allegations made earlier to the Mumbai police,” one source noted.

The Burman family has expressed their support for the investigation, stating that it will “help bring the correct facts to light.”

A spokesperson for the family stated, “The open offer price for REL has been calculated based on the formula outlined in Sebi takeover regulations, arriving at ₹221. Our open offer price, set at ₹235, is at a premium to this price. Ultimately, it will be up to the shareholders to decide whether to tender their shares in the open offer or remain invested, post regulatory approvals.”

JM Financial, the manager of the Burmans’ open offer is also named in the FIR.

The three non-executive independent directors of Care Health Insurance summoned include SL Mohan, Asha Nair, and Hamid Ahmed.

Mohan retired from Care Health’s board a few months ago, while Ahmed also serves as an independent director in REL.

Last month, the insurance regulator penalized Care Health for issuing stock options to Saluja despite previous prohibitions. The company was instructed to buy back 7.66 million shares allotted to her.

However, the Securities Appellate Tribunal (SAT) recently stayed the order by the Insurance Regulatory and Development Authority of India (IRDAI) but restricted Saluja, who is also the Care Health chairperson, from exercising the options.

The federal probe agency has also requested details about employee stock option plans (ESOPs) issued by Care Health between FY19 and the present. Additionally, the agency is seeking information on the board and statutory approvals related to these ESOPs.

Mumbai Police Case

The Economic Offences Wing (EOW) of the city police, which is conducting its own investigation, has sought clarification from the Securities and Exchange Board of India (Sebi) regarding the allegations made by the complainant.

The city police also reached out to REL to determine if the company suffered any financial losses. Representatives from REL provided their perspective on the case.

In November 2023, following a local court order, the city police registered an FIR and subsequently transferred the case to its EOW for investigation.

“There are certain allegations made by the complainant that don’t seem to align with the facts. For example, the complainant alleges that the open offer was intended to assist the Singh brothers (the former promoters) in securing bail. However, court documents indicate that they were granted bail in June, while the open offer was made in September. Additionally, the complainant purchased shares in October, at least 10 days after the offer was announced,” a source explained. “Assistance has been sought from Sebi on specific aspects of the case, and their response is awaited.”

The Last Bit, As the investigation into the Religare open offer unfolds, the involvement of high-profile individuals such as Mohit Burman and other key persons brings significant attention to the case.

At the same time, the Burman family has welcomed the inquiry, expressing confidence that it will clarify the facts and bring transparency to the process.

With both the Enforcement Directorate and the Economic Offences Wing (EOW) of the city police actively probing the matter, the coming weeks may shed more light on the allegations and counter-allegations that have emerged in this high-stakes financial dispute.