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Fortis Healthcare ordered to recover $55M from founders, 8 firms

The Securities and Exchange Board of India ordered Fortis Healthcare Ltd. to recover $55 million from its two founding members and eight related firms pending an investigation into the withdrawal of 5 billion rupees from the hospital company.

The company will have three months to collect the funds from the founders and related firms, plus due interest, according to an Oct. 17 order from the exchange board.

In February, Bloomberg reported that Indian tycoon brothers Malvinder Singh and Shivinder Singh took out 5 billion rupees from India's second-largest private hospital chain without the board's approval. As a result, the company's auditors, Deloitte Haskins & Sells LLP, refused to sign off on the company's second-quarter results until the money was accounted for.

The Indian regulator met with the company's auditor and later appointed a forensic expert to review bank statements of all related entities and issue a report. Based on the report's findings, the exchange board ordered a detailed investigation in the matter to narrow down the role of all involved entities.

While the investigation is ongoing, the exchange board issued the initial request to collect the money to protect the interest of Fortis' shareholders, Reuters reported. The exchange board has barred the Singh brothers and the eight firms from selling their assets or from diverting funds other than use for daily business expenses.

Fortis Healthcare accepted IHH Healthcare Bhd.'s 40 billion rupees acquisition offer in July. The deal is yet to be closed.