New Delhi/ Mumbai: The salary of Bhavdeep Singh, chief executive officer (CEO) of the cash-strapped Fortis Healthcare Ltd, rose more than fourfold between July 2015 and March 2017 even as the company’s financial health deteriorated. Singh, who was hired at a salary of ₹ 3.91 crore in July 2015, saw his salary jump to ₹ 16.80 crore in the following year, according to the company’s annual reports of 2015-16 and 2016-17. Singh was also paid a joining bonus of ₹ 7.23 crore and as many as 2.5 million stock options.
What makes the jump in Singh’s salary particularly egregious is that Fortis Healthcare, under Singh’s stewardship, reported losses of ₹ 73.5 crore and ₹ 74.7 crore in 2015-16 and 2016-17, respectively.
A recent investigation by law firm Luthra and Luthra also found that unsecured loans worth ₹ 445 crore were given to three firms affiliated to former promoters Singh brothers—Malvinder Singh and Shivinder Singh—during this period.
To be sure, the Luthra and Luthra report mentions “objections on record indicate that management personnel and other persons involved were forced into undertaking the ICD (inter-corporate deposit) transactions under the repeated assurance of due repayment and it could not be said that the management was in collusion with the promoters to give ICDs to the borrower companies.”
In response to an emailed questionnaire, a Fortis spokesperson said, “The assertion is factually incorrect as there is a typo in the FY16-17 annual report with an incorrect number, grossly overstating Mr Singh’s income. We are aware of this and a correction will be published in the upcoming 17-18 report. In reality, his income has gone up 6 to 8% in each of the last two years which is very much within the norms (if not lower) of the country today.”
Despite repeated requests, the spokesperson did not respond to queries on whether the company has informed about the “typo” to stock exchanges, registrar of companies, the company’s auditors, and other statutory bodies.
Fortis had started to post losses from 2014-15 when the company posted a loss of ₹34 crore—first time after 2008-09.
“This is a classic case of golden handcuffs. Basically you want the CEO to toe your line and you pay him more irrespective of the company’s performance so that the CEO keeps quiet and doesn’t object to your financial irregularities. This has been simply done so that he toes the line of the promoters,” said Shriram Subramanian, founder and managing director of proxy firm InGovern Research.
The newly constituted board at Fortis has submitted the Luthra & Luthra report to Serious Fraud Investigation Office and Sebi who have opened a probe into alleged irregularities at Fortis Healthcare and Religare.
Questions are likely to be raised on the role of the board and the nomination and remuneration committee of Fortis.
“The role of the then board of Fortis is questionable. On what grounds did the salary of the CEO increase from ₹ 3 crore to almost ₹ 17 crore, when the company was making tremendous losses,” said a person in Fortis Healthcare, on condition of anonymity.