Standard Chartered Bank settles case with Sebi in CG Power case; pays Rs 4.97-cr

The order came after Standard Chartered Bank (SCB) approached Sebi proposing to settle the case pertaining to alleged violations of PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules “without admitting or denying the findings of fact and conclusions of law”, through a settlement order.

“Pending enforcement proceedings for the alleged defaults … are settled qua the applicant,” Sebi said in its settlement order passed on Tuesday.

The regulator further said it will not initiate other enforcement actions against the applicant for the defaults.

Sebi had initiated proceedings through a show cause notice issued to the bank in May 2021 for the alleged violations of PFUTP rules.

In the show cause notice, Standard Chartered Bank was alleged to have benefitted a private limited company controlled by the promoter group companies, at the expense of a listed company (CG Power) to the detriment of the interest of the minority shareholders of CG Power.

As per the order, Avantha International Asset BV (AIABV), an entity related to the promoter group of or CG Power, had taken a loan from SCB. In October 2017, SCB disbursed a loan of Euro 44 million to CG International BV (CGIBV) which was transferred to AIABV on the same day to repay its earlier loan from SCB. The funds were later frozen by SCB at AIABV.

In February 2018, SCB disbursed another loan of Euro 44 million to CG Industrial Holdings Singapore Pte Ltd (CG Singapore’) which was transferred to AIABV on the same day.

On the same day, AIABV returned the funds received from CGIBV which were frozen and CGIBV utilized these funds for repayment of the loan taken from SCB in October 2017.

Further, in April 2018, the funds received by AIABV from CG Singapore were utilised for repayment of an earlier loan of Euro 44 million taken by AIABV from SCB.

In other words, a loan taken by CG Singapore, a subsidiary of CG Power, was used to repay the liability of AIABV, which is an entity related to the promoter group of CG Power, Sebi noted.