Taking a serious view of alleged irregularities in the transfer of controlling stake in a subsidiary of country?s largest depository Stock Holding Corporation of India (SHCIL), the government has ordered a probe by the multi-disciplinary Serious Frauds Investigation Office (SFIO) into the affairs of the subsidiary, SHCIL Services Ltd (SSL).

According to sources, the ministry of corporate affairs ordered a SFIO probe after initial investigations pointed to irregularities. ?A company investigation by SFIO has been ordered, primarily to find out true ownership and other alleged irregularities related to SSL. We expect a report in about six months,? sources told FE.

SHCIL, the original promoter of SSL, has alleged that the subsidiary — at the behest of its former chairman R Jayaraman Iyer, CEO S Ramanathan and some other directors — diluted its shareholding by alloting shares to third parties (including through FDI) in a ?clandestine and fraudulent manner?. Also, SHCIL alleged that SSL split a government of India contract it bagged for the role of central record keeping agency to facilitate e-stamping system (floated post-Telgi stamp paper scam).

While SHCIL desired to enter into contractual arragement with Singapore?s Crimsonlogic Global Pte Ltd for procuring software for the BOT project, Iyer split the contractual arrangement in two to ?defruad? SHCIL.

SHCIL has alleged that Iyer ?wilfully and deliberately? introduced Unitec Value Solutions (a Singapore-based subsidiary of SSL) as an intermediary in the contract structure to defraud it and said this resulted in a financial loss of more than Singapore $5 million to it.

?This resulted in a clandestine conspiracy to transfer funds out of India in foreign currency and financial gains to a few individuals, thereby causing financial losses to SHCIL,? it said, adding that Unitec was formed to ?further their fraudelent and illegal acticities and defraud SHCIL?.

SHCIL has alleged that Iyer, Ramanathan and some other directors were responsbile for the dilution of its stake in SSL to as low as 24%.

It said due to this ?clandestine? operation, it was marginalised and suffered huge financial losses.