Sesa Goa Gets Probe Notice from Fraud Investigation Agency By PRASENJIT BHATTACHARYA
NEW DELHI -- Sesa Goa Ltd., a unit of Vedanta Resources Plc, said Thursday it has received a notice from India's federal fraud investigation agency for a probe into its finances and management between 2001 and 2009. "The scope of investigation includes looking into the state of affairs of the company... in respect of mismanagement, malpractices, financial and other irregularities," Sesa Goa said in a statement to the Bombay Stock Exchange. Sesa Goa, India's second-largest iron ore miner by sales, said it will "fully cooperate with the investigation." It didn't say when the probe would begin, but the Serious Fraud Investigation Office said the investigation will be completed in the next six months. Sesa Goa said the order for the investigation may have originated from a shareholder complaint in 2003 before Sesa Goa was acquired by Vedanta. Write to Prasenjit Bhattacharya at prasenjit.bhattacha...@dowjones.com http://online.wsj.com/article/SB125679572352815329.html?mod=rss_about_india * * * SFIO probes Sesa Goa for financial fraud October 29, 2009 16:56 IST The government has ordered the Serious Fraud Investigation Office, to probe into mismanagement and financial irregularities in Vedanta Group-owned Sesa Goa [ Get Quote ] and its subsidiary Sesa Industries (SIL), the company said on Thursday. "The scope of SFIO investigation include looking into the state of affairs of the company and its subsidiary Sesa Industries Ltd, in respect of mismanagement, malpractices, financial and other irregularities," Sesa Goa said in a filing to the Bombay Stock Exchange [ Images ]. The SFIO enquiry, to be completed in six months, follows a probe by registrar of companies which was looking into Sesa Goa's case since 2003. "The company... has received request from the RoC for information for the period from 2001 to 2009," the statement said, adding it also received an intimation for the SFIO probe from the Ministry of Corporate Affairs yesterday. Clarifying its position, Sesa Goa said, "the company believes that the investigation originates from the complaints filed by one of the shareholders of SIL against SIL, the company and the directors in 2003, prior to the acquisition of the company by Vedanta in April 2007." The company added it will fully cooperate with the investigation and expressed its commitment to follow the highest norms for corporate governance and transparency. Following the announcement, Sesa Goa shares fell as much as six per cent in morning trade on the BSE. It was trading down 1.69 per cent in the afternoon session. Allegations against the company, official sources said, also include diversion of funds. The RoC had submitted its report on Sesa Goa early last week. On Wednesday, Corporate Affairs Minister Salman Khurshid had termed the inspection as a "normal procedure" and said, "These inspections are procedures that have to be followed before taking a final decision." Meanwhile, another case pertaining to merger of Sesa Goa, the country's leading iron ore producer, with its subsidiary Sesa Industries is pending before the Supreme Court. The London-based Vedanta Resources in 2007 had acquired a 51 per cent controlling stake in Sesa Goa from Mitsui Co, for $981 million. http://business.rediff.com/report/2009/oct/29/sfio-probes-sesa-goa-for-financial-fraud.htm * * * Vedanta unit Sesa Goa under fraud investigation By Pratish Narayanan and Ruchira Singh MUMBAI (Reuters) - Sesa Goa (SESAGOA.NS : 299.55 +3.95), a $5 billion unit of London-listed metals group Vedanta Resources, is being investigated by the government for financial and other irregularities. India's largest iron-ore exporter said on Thursday it and its unlisted Sesa Industries Ltd (SIL) subsidiary were under investigation by the Serious Fraud Investigation Office (SFIO), and the probe had to be completed in six months. The investigation comes 10 months after India's biggest corporate scandal, a $1 billion fraud at IT services firm Satyam (SATYAM.BO : 100.6 -5.65) Computer. "I think the overseas investors will be very happy that the regulatory agencies in India are becoming more and more intrusive in company affairs," said Rishi Sahai, managing director of Cogence Advisors, a New Delhi-based corporate advisory firm. "There is an increased focus on protecting shareholders' interest," he said. Sesa Goa said it believed the investigation originated from a complaint filed in 2003 by a shareholder of Sesa Industries. Vedanta bought a 51 percent stake in Sesa Goa in 2007 for nearly $1 billion from Japanese trading house Mitsui & Co. The company said it received requests from the Registrar of Companies for information from 2001 to 2009. "The scope of investigation includes looking into the state of affairs of the company and SIL in respect of mismanagement, malpractices, financial and other irregularities," Sesa Goa said in a statement. Mitsui said it had not heard from the SFIO or Sesa Goa about the investigation and was not in a position to comment. "Sesa Goa is expanding its mining operations in India, and this might have invited regulatory scrutiny," said Deven Choksey, chief executive of K.R. Choksey Shares and Securities. "Otherwise it is very confusing, and there is no clarity on what this investigation is all about." SHARES RECOVER Headquartered in the picturesque state Goa, famous for its beach resorts, Sesa Goa's mining operations have faced protests from activists who claim it pollutes the environment and contaminates ground water. Sesa Goa shares fell as much as 6 percent on Thursday before rebounding to close up 1.5 percent at 300.10 rupees. In London, Vedanta shares were down 0.7 percent, while the mining index was up 1.4 percent. Sesa Goa shares fell 12 percent on Tuesday after local media first reported the investigation. The company said then it was unaware of any probe, and its shares ended up 7 percent on Wednesday after earlier dropping to a three-week low. "You can't expect it to fall much more, pending further clarity," said a dealer at a brokerage in Mumbai on Thursday. (For Quotes and Interactive Charts of Sesa Goa click http://in.reuters.com/money/quotes/chart?symbol=SESA.BO) (For more news on Reuters Money visit http://www.reutersmoney.in) http://in.biz.yahoo.com/091029/137/baugez.html