SFIO probes Sesa Goa for financial fraud

The government has ordered the Serious Fraud Investigation Office, to probe into mismanagement and financial irregularities in Vedanta Group-owned Sesa Goa 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.

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.