Corporate Governance

1. CORPORATE GOVERNANCE PRESENTATION ON
FORTIS HOSPITAL
Presented by
Group no 2
Deepak Patel DM21D34
Samar Ghorai DM21B44
Isha Singh DM21E05
Aditi Tiwari DM21E25
Rahul Kumar DM21D40

2. Group Presentation

3. INTRODUTION:
 The company was founded by the visionary business leader, Late Dr. parvinder singh
the architect of Ranbaxy Laboratories.
 Established in November 2005
 The fortis Group mainly focuses on healthcare which was a major concern in our
country at that time. Its first hospital was established at Mohali.
 Their hospitals includes multi speciality as well as super speciality canters
providing comprehensive tertiary and quaternary healthcare to patients across
specialities such as cardiac care, orthopaedics, neurosciences, oncology, renal
care, gastroenterology, mother and child care.
 Fortis has been rapidly growing through a combination of acquisitions, Greenfields,
brownfields and management contracts.

4. Corporate governance structure of Fortis
Healthcare:
1.Board of Directors:
 Malvinder Singh: Former Executive Chairman of Fortis Healthcare
• Shivinder Singh: Former Vice Chairman of Fortis Healthcare
• Brian Tempest: Independent Director and Chair of the Audit Committee
• Harpal Singh: Independent Director and Chair of the Nomination and Remuneration Committee
• Sabina Vaisoha: Independent Director and Member of the Audit Committee
2.Audit Committee: Brian Tempest served as the Chair of the Audit Committee, which was responsible
for overseeing the company's financial reporting, internal controls, and audit processes.
3.Nomination and Remuneration Committee:
Harpal Singh served as the Chair of the Nomination and Remuneration Committee, which was responsible for
recommending the appointment of directors, determining their remuneration, and overseeing the company's
employee compensation policies.
4.Management Teams:
• Bhavdeep Singh: Former CEO of Fortis Healthcare
• Gagandeep Singh Bedi: CFO of Fortis Healthcare
• Anil Vinayak: Former CEO of Fortis Hospitals

5. How the scam happened:
1. In November 2017, a seven-year-old girl suffering from dengue fever died at Fortis Hospital in Gurgaon, Haryana, after
receiving treatment for two weeks. Her parents were billed over Rs 16 lakh ($22,000) for the treatment, including Rs 2 lakh
for 660 syringes.
2. The incident sparked outrage on social media, and the Haryana government ordered an inquiry into the matter.
3. In February 2018, the inquiry report was submitted, which found several irregularities in the functioning of the hospital,
including overcharging, negligence, and lack of transparency.
4. The report also highlighted the case of another patient who was overcharged by Fortis Hospital in the same period.
5. Following the report, the hospital was accused of overcharging patients for medicines and medical equipment, including
syringes, gloves, and catheters.
6. The controversy led to protests and calls for action against the hospital. The Indian government also initiated an
investigation into the matter.
7. In June 2018, the Securities and Exchange Board of India (SEBI) initiated a probe into alleged insider trading by Fortis
Healthcare's promoters and directors.
8. In August 2018, the Delhi High Court imposed a fine of Rs 403 crore ($55 million) on Fortis Healthcare for not disclosing
facts related to a loan provided by the Singh brothers to a firm related to them.
9. In March 2019, the Singh brothers were found guilty of contempt of court for violating the court's order in a case related to
the sale of their stake in Fortis Healthcare.
The Fortis Hospital scam happened due to several irregularities and alleged overcharging and medical negligence by the
hospital. The incident sparked outrage and led to protests and investigations by the government and regulatory authorities.

6. Analysis of the gaps in Fortis Healthcare's corporate
governance practices:
 Lack of transparency
 Conflicts of interest
 Inadequate risk management
 Board composition
 Weak internal controls

7. Regulatory and Legal Actions:
1. Securities and Exchange Board of India (SEBI) investigation: SEBI conducted an investigation into Fortis
Healthcare and its promoters for alleged violations of insider trading norms. The investigation found that the promoters
had disclosed price-sensitive information to their relatives and friends, which was used to trade in the company's
shares. As a result, SEBI imposed a penalty of INR 40 million (approximately USD 535,000) on the promoters.
2. Serious Fraud Investigation Office (SFIO) investigation: SFIO conducted an investigation into Fortis Healthcare
and its promoters for alleged financial irregularities. The investigation found that the promoters had siphoned off funds
from Fortis Healthcare to other companies owned by them. As a result, SFIO filed a criminal complaint against the
promoters and several other individuals, including former directors of Fortis Healthcare.
3. Delhi High Court order: The Delhi High Court ordered Fortis Healthcare's former promoters to deposit INR 35 billion
(approximately USD 470 million) as a guarantee for the recovery of funds that were allegedly siphoned off from the
company. The court also ordered the Singh brothers to furnish a list of their assets and bank accounts.
4. Fortis Healthcare's de-listing from stock exchanges: After the fraud came to light, the company's stock price
plummeted, and it faced several lawsuits and regulatory actions. As a result, the company's promoters decided to de-
list the company from the stock exchanges.
5. Settlement with Securities and Exchange Board of India (SEBI): In December 2020, Fortis Healthcare and its
former promoters settled with SEBI over allegations of insider trading. The settlement required the promoters to pay a
penalty of INR 26.8 million (approximately USD 360,000) to SEBI.

8. Conclusion:
The Fortis Hospital fraud case highlights the need for stricter regulations and accountability in the
healthcare industry. It also underscores the importance of patients and their families being vigilant and
informed about their rights and the quality of care they receive.
The case also serves as a reminder of the importance of strong corporate governance, regulatory
oversight, transparency, ethical business practices, and the responsibility of promoters and major
shareholders in ensuring the success and sustainability of companies.