Fortis Healthcare has said it will appoint an external agency to undertake scrutiny of its internal controls and compliances after an investigation found systemic lapses in funds allegedly taken out of it by erstwhile promoters Singh brothers.
The company had in February this year decided to carry out an independent investigation through an external legal firm following allegations of siphoning off nearly Rs 500 crore by the founding family through inter-corporate loans (ICDs).
“With respect to the other matters identified in the Investigation Report, the Board will appoint an external agency of repute to undertake a scrutiny of the internal controls and compliance framework in order to strengthen processes and build a robust governance framework,” Fortis Healthcare said in its Annual Report for 2017-18.
The company further said, “Towards this end, they will also evaluate internal organisational structure and reporting lines, the delegation of powers of the Board or any committee thereof, the roles of authorised representatives and terms of reference of executive committees and their functional role.”
The investigation report was submitted to the re-constituted board of the company on June 8, 2018.
It found that the ICDs provided by the company’s wholly-owned arm Fortis Hospitals Ltd to group firms of ex-promoters, billionaires Malvinder Singh and Shivinder Singh, “were not given under the normal treasury operations” and were not and specifically authorised by its board.
In the annual report, Fortis Healthcare further said, “We will also assess the additional requisite steps to be taken in relation to the significant matters identified in the investigation report, including inter alia, initiating an internal enquiry.”
Stating that regulatory authorities are currently undertaking their own investigation, the healthcare chain said due to limitations on information available the external legal firm which conducted the investigation, at this juncture its board is unable to make a determination on whether a fraud has occurred in the company.
Addressing the shareholders, Fortis Healthcare Chairman Ravi Rajagopal said the new board is also “making a much more involved effort” in understanding the controls and process frameworks within the company. “Our focus in the future will be on strengthening governance and transparency and restoring the health of the business,” he said.
In July, Malaysia’s IHH Healthcare had won the race to take control of Fortis with plans to immediately invest Rs 4,000 crore.