SEBI Reveals Diversion Of Public Funds By ZEE's CEO And Chairman Emeritus To Private Entities

The Managing Director and CEO Punit Goenka of this sizable listed company, along with Chairman Emeritus Subhash Chandra, diverted public funds to private entities, according to the Securities and Exchange Board of India (SEBI) in its response to the Securities and Appellate Tribunal (SAT) in the matter of Zed Enterprises as per IANS reported.

"In the instant case, we have a situation before us where the Chairman Emeritus and the Managing Director and CEO of this large listed company are involved in a myriad of different schemes and transactions through which vast amounts of public money belonging to listed companies are diverted to private entities owned and controlled by these persons," IANS quoted SEBI as saying in its reply to SAT.

Zee Entertainment Enterprises (ZEE) has also written to SEBI claiming that "continuous and repetitive" investigations into the same cause of action are unfair to the company and its shareholders and may have an adverse effect on the merger process.

The Composite Scheme of Merger between ZEEL and Sony Pictures Networks India Pvt. Ltd. ('Sony') has received a No Objection Certificate ('NOC') from SEBI. This merger is one of the largest between major players in the media sector and will bring in about USD 1.7 billion (approximately) in foreign direct investment to India.
In a letter to SEBI, Zee said, "Please note that the said merger is at an advanced stage post receipt approvals from various regulators (including SEBI, Stock Exchanges and CCI etc.) and the scheme is also approved by 99.9 per cent of the equity shareholders of ZEEL."

It is claimed that neither the loan terms nor the loan amount that Borrower Entities and Yes bank agreed to were ever disclosed to us. There was no contractual relationship between ZEEL, Yes Bank, and the borrowers. Without any involvement from ZEEL, YBL unilaterally took measures that led to the misuse of ZEEL's FD.

In response to the SEBI order that forbade Subhash Chandra and Punit Goenka from serving as directors or other key management people in any publicly traded business due to allegations of embezzlement of money from Zed Enterprises, they filed a complaint with the SAT.

"The Appellant's conduct is telling in this regard. Not only have there been violations but also the issuance of multiple false disclosures and submission of statements to cover up such wrongdoings. In Shirpur, we have also seen that the promoter group timed its offloading of shares in the open market to avoid bearing the brunt of the fall in the market value of Shirpur's shares. It is ultimately the small retail investors who endured the downfall in share price," SEBI added.