'Negative forces at play': Subhash Chandra accuses SEBI of trying to scuttle Zee-Sony deal

Zee Entertainment promoter Subhash Chandra wrote to Finance Minister Nirmala Sitharaman, seeking the Centre's intervention, a week before the firm's $10 billion media merger with Sony's India was called off. 

In the January 16 letter, accessed by BT, Chandra urged the FM to "safeguard the interest of Zee Entertainment's minority shareholders."

Chandra said the SEBI action appeared to be "an exercise to sensationalise the matter via media platforms."

Here is what he wrote:

Respected Madam, I am writing this letter to bring to your kind notice the efforts going on to scuttle investment/merger transaction, where Sony of Japan is supposed to invest $1.5 billion. 

I have written a letter to the Chairperson of Sebi, which is enclosed for ready reference. In case you kindly read the letter it's content will confirm my fear mentioned above. 

I am not suggesting that Sebi should not investigate, if they have doubts of any kind. The Company and all other people are cooperating in the investigation, even the department has also summoned an ex-director, questioning him for over 4 hours. 

My concern is the timing of this new notice, and the urgency of the same since it matches with the merger completion timeline of ZEE and Culver Max. 

The mentioned notice does not contain any point which is not already a part of the Company's records, that have already been provided to SEBI. Sebi has been acting with predetermined mind, which is evident in the order passed by the appellant court, Justice Tarun Agarwalla, the Presiding Officer of the Securities Appellate Tribunal (SAT) in an order dated 30th October 2023 stated as per that - "The Chairperson committed a manifest error in confirming the ad interim order on the ground of presumptions, assumptions/preponderance of probability. The Supreme Court has categorically held in a catena of cases that foundational facts must be established first before a presumption is made." 

Justice Tarun Agarwalla further emphasizes that - "there is material to show that appellant has always been cooperating with SEBI and whatever information was sought was duly supplied." Further, he also states that - "On one hand the Chairperson has based its finding on a preponderance of 
probability while on the other hand has refused to accept the evidence filed by the appellant and has rejected the same on the ground that the documents do not prove the genuineness of the transaction beyond a reasonable doubt. 

This contrary stand taken by the Chairperson is, in our opinion, arbitrary." 

I firmly believe that issuing a notice to the former directors of ZEE at this stage, appears to be an exercise to sensationalize the matter through media platforms. I had expressed my concerns earlier as well, in a letter to SEBI in November 2018 (copy enclosed for ready reference) over negative forces impacting the valuation of ZEE, but my requests went unnoticed. 

As a promoter, I understand and value the relation between companies and its lenders, to grow the Nation's economy. I have personally taken consistent efforts to engage with all the lenders and have managed to repay approximately 92% of my debt to the tune of around Rs. 40,000 crore. I continue to take efforts to ensure that the lenders who suffered financial losses because of me, are repaid and their losses are compensated. 

That said, if the mentioned parties continue to influence the investigations, especially by SEBI, it will lead to a huge financial loss for the minority shareholders of ZEE. As the founder of the Company, several shareholders repeatedly request me to help the Company as its proposed merger with Culver Max Entertainment remains extremely important for all shareholders. 

Thanking you. I once again request your kind intervention into this matter, and urge your office to take the necessary steps, in order to safeguard the interest of the minority shareholders of ZEE.