Mumbai: The Congress on Thursday raised serious concerns over the investment made by the Life Insurance Corporation (LIC) in Rajesh Exports Ltd (REL), a company currently facing a major investigation by the Securities and Exchange Board of India (SEBI).
Congress leader Jairam Ramesh said LIC holds around 10.8 percent stake in Rajesh Exports. He questioned how the insurance giant failed to detect the alleged financial irregularities that SEBI has now highlighted.
SEBI Alleges Massive Revenue Inflation
According to an interim order issued by SEBI on June 3, the regulator has found preliminary evidence of large-scale misrepresentation in the company’s financial statements.
SEBI has alleged that Rajesh Exports inflated its revenues between FY21 and FY25. The regulator estimated that the misrepresented revenue could be close to Rs 15 lakh crore, making it one of the biggest accounting concerns seen in recent years.
Calling the figure “mind-boggling”, Ramesh said investigations are still underway and a final report is awaited.
Congress Questions LIC’s Role
The Congress leader said it was disturbing that LIC owned a significant stake in a company now facing such serious allegations.
He also pointed out that several banks reportedly have exposure to the company.
Ramesh questioned whether LIC’s decision to acquire such a large stake was based purely on investment considerations or influenced by the ruling establishment. He demanded greater accountability and transparency regarding the investment.
SEBI Bars Promoter Rajesh Mehta
SEBI has barred Rajesh Exports Chairman and Managing Director Rajesh Mehta from buying, selling or dealing in the company’s securities until further orders.
The regulator said Mehta exercised significant control over the company’s daily operations and financial decisions.
SEBI also directed the company to provide accurate financial disclosures and cooperate fully with the ongoing investigation.
Auditors and Forensic Review Under Scanner
The market regulator noted that the company repeatedly failed to provide satisfactory explanations regarding fund flows and financial records.
SEBI also criticised the company’s statutory auditors for not submitting promised audit working papers.
The regulator has now ordered the appointment of a new forensic auditor to examine the company’s books and complete a detailed investigation into the alleged irregularities.
