Representational image
Representational image

India's employment scenario, which witnessed a revival in the past few month post a lockdown-induced setback, has again witnessed a dip in November.

Allegations by a whistleblower that promoters of UPL Ltd have siphoned off money through several shell corporations led to the sharpest crash today in the company's shares in close to nine months.

The whistleblower has alleged that Chief Executive Officer Jaidev Shroff, along with family members, is in control of eight shell companies through nominees, and these corporations were used to carry out illegal transactions, according to a report.

The letter has alleged that Shroff and his family have been using shell entities to systematically divert funds of UPL for their personal gain, by means of various related party transactions and dubious deals. Shares of UPL plunged as much as 14%, marking the steepest fall since March, when the COVID19 pandemic had just started to wreak havoc on the globe. The addresses of some of these shell companies are the same as that of UPL's offices, which also indicates a link between them and UPL or its promoters, said the report.

The whistleblower has also alleged that UPL rented a property from one of these shell companies and used the rent agreement to siphon off funds, as the house in question was owned by Shroff. Filings made to the Ministry of Corporate Affairs show that the shell company, Sadafuli Finvest Pvt Ltd, may have inflated incomes received from UPL as rent for the property, the report said. Shroff's comments to a TV channel that the auditors have reviewed the transactions related to rental agreement and that the matter was put to rest in 2017 did not pacify investors.

The accusation of governance lapses at UPL aren't new. Concerns over corporate mis-governance have been haunting UPL's investors since KPMG Mauritius, the auditor of the company's Mauritius subsidiary, resigned suspiciously a few months ago. KPMG Mauritius, which was the auditor of UPL Corp, did not submit its resignation in the prescribed format by SEBI, leaving company officials to fill in the details themselves, reports had said.

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