Whistleblower, Paras Kuhad, alleged that Edelweiss Group and Caisse de depot et placement du Québec, a Canadian institutional investor, which hold stakes in the ARC, diverted funds and did not adhere to norms.
The ministry of corporate affairs (MCA) has launched a probe into the books of Edelweiss Asset Reconstruction Company (EARC) following allegations by a whistleblower of fund diversion and irregularities.
The whistleblower, Paras Kuhad, a former additional solicitor general of India, had written to the Prime Minister’s Office and the Reserve Bank of India (RBI).
Kuhad has alleged that Edelweiss Group and Caisse de depot et placement du Québec (CDPQ), a Canadian institutional investor, which hold stakes in the ARC, diverted funds and did not adhere to norms while making investments in EARC’s instruments.
Sources have indicated that a probe has been initiated, but the MCA did not comment on the issue.
Kuhad’s family has been a stakeholder in the ARC since its inception.
At present, the Kuhad family holds over 10 per cent stake in the ARC with a representation on the board of firm.
Edelweiss Financial Services, the BSE-listed holding entity of Edelweiss Group, in a statement to the exchange said that it denies every “allegation, contention, statement and/or assertion” against it...
EARC has not received any intimation of any inspection being conducted by the MCA, and is in fully compliant with applicable laws, the company said.
It has been conducting its operations in a fair and transparent manner, and has acted responsibly and discharged its fiduciary responsibilities, the company said, adding that the allegations seemed to be motivated.
EARC is a RBI regulated entity and equity investments made in it are approved by RBI, the company said.
Further, CDPQ continues to hold Compulsorily Convertible Preference Shares (CCPS) of ARC, it added.
EARC’s assets under management stood at Rs 40,800 crore at end of December 2020, with equity of Rs 2,177 crore.
The company made gross recoveries of Rs 3,615 crore from 139 clients in the nine months till the end of December.
It had a liquidity position of Rs 620 crore.
Photograph: Pawel Kopczynski/Reuters