Global private equity firm Actis LLP in deep trouble over allegations of money laundering

The Patiala House Court on Tuesday ordered the Economic Offences Wing (EOW) of the Delhi Police to register an FIR against London based Private Equity firm Actis and 12 others for allegedly conspiring to gain control over the finances, ownership and management of Super-Max Limited, which is a leading razor manufacturing company after Gillette.

The order was passed based on the allegations levelled by Mr Subhash Choudhari, an ex-associate of Super Max Group of companies (SM Group). In his complaint, Mr Choudhari has made allegations amounting to criminal conspiracy, cheating and money laundering against Actis LLP and 12 others.

Subsequently, the EOW has registered an FIR in the case to investigate the case further. Those named in the FIR include: Actis LLP (UK), Actis Consumer grooming products Ltd and Dubai based Wesley International Ltd. Besides these entities, the group CEO Mr Anindo Mukherjee and the group CFO Mr Ketan Desai have also been booked among others.[WU1]

Mr Choudhari had earlier approached the EOW in June 2019 but to no avail, as the EOW informed him vide a letter in January 2020 that no cognizable offence was found during its investigation. Therefore, Mr Choudhari moved the Court seeking directions to register an FIR in this case.

Mr Choudhari claimed that Actis LLP conspired with 12 other accused persons to misuse the investment-friendly environment of India and siphon off the money by committing offences amounting to forgery, falsification of accounts, and criminal breach of trust among others.

He further stated that Actis LLP, acting through its partners, had approached the Super Max Group to with a proposal to infuse funds in the Super Max Group. 

Actis LLP allegedly misrepresented to the erstwhile management of the SM Group that they would provide strategic, financial, managerial prowess and gold standard corporate governance, which can help the SM Group convert itself into a Billion Dollar enterprise by the end of 5 years. 

He submitted that Actis LLP induced the promoter Malhotra family to make this deal on the false pretext that Actis and its partners had expertise in managing family-owned businesses especially in the context of Indian business ecosystem.

However, Actis allegedly gained wrongful ‘pervasive control’ over the global management and functioning of the SM Group through a series of illegal activities over the years.

It is pertinent to point out that reports of a tussle between the founder of SM Group and Actis had surfaced previously as well. Actis LLP along with its partners allegedly defrauded the investors to make a wrongful gain on the basis of misrepresentations in the financial statements and fabrication of the accounts of Super Max Personal Care Private Limited (SPCPL), a company of SM Group.

Mr Chaudhary, through his Advocates, placed reliance on the judgment given by the Supreme Court in “Lalita Kumari Vs. Govt. of U.P. & ors.” Crl. Writ Petition 68 of 2008. This judgment emphasizes the fact that it is the duty of the police to register an FIR if the information discloses commission of cognizable offences.

Chief Metropolitan Magistrate Pawan Singh Rajawat stated he was satisfied that the contents of the complaint prima facie merit the registration of an FIR, therefore, he directed  EOW to register it. He also pointed out that the allegations indicate towards deep conspiracy, which not only have ramification qua the complainant and the alleged victim companies but may lead to unearthing large-scale money-laundering activities being done by the accused persons.

Advocate Pramod Kumar Dubey, Counsel for the complainant assisted by Advocate Nirvikar Singh told BW Legal World that "This is a classic case of deep-rooted criminal conspiracy to commit various offences including money laundering, criminal breach of trust etc".

He further added that "accused persons have caused loss to the Exchequer of Government of India and siphoned the money in a calculated manner. They have not only cheated the Indian company but have committed offences involving illegal money laundering activities".