Veritas Winds Up India Biz, Cites Loss Of Reputation Due To FIRs – The Economic Times – 2-Dec-2014
December 4, 2014 - Uncategorized
Veritas Investment Research Corporation, the Canada-based stock research firm best known for its scathing reports, has discontinued all its research on Indian companies.
The firm disclosed this in a suit filed before Ontario Superior Court of Justice in Canada claiming $11 million damages from Indiabulls Real Estate and Indiabulls Housing Finance. Indiabulls had filed FIRs in Mumbai and Gurgaon in August 2012 against Veritas and its two analysts who, in a report, had accused the realty and financial services group of sacrificing corporate governance practices to enrich key shareholders.
In the suit filed by Veritas, the firm alleged that officers of the Indiabulls Real Estate and Indiabulls Housing Finance who affirmed the FIRs worked closely with and actively assisted law enforcement authorities and the crown prosecutor in the early stages of the criminal proceedings. This was followed by Veritas’ decision to discontinue the India research services.
“Indiabulls Real Estate and Indiabulls Housing Finance procured the commencement of the criminal proceedings in India with the objective of harming them (i.e. Veritas and its analysts) by preventing or discouraging them from continuing to provide the India research services,” said the law suit. “Veritas lost its existing clients for the India research services and significant numbers of prospective clients and suffered substantial business and reputational harm and loss of revenue from what would have been a highly successful business,” said Veritas.
On August 8, 2012, Indiabulls filed an FIR against Veritas and its two India born analysts – Neeraj Monga andNitin Mangal – who authored the report on Indiabulls, with the Gurgaon police and next day with the Mumbai police.
Two years later, last Tuesday, Nitin Mangal surrendered before a Haryana court.
In its lawsuit, Veritas said that despite assuring full co-operation with Indian police or authorities under the India-Canada mutual legal assistance treaty, Indian legal authorities never made any formal request for Canadian legal assistance nor made any meaningful progress in the criminal proceeding against them in India.
On October 30, 2012, Neeraj Monga had sent a mail to Sebi chairman, requesting his intervention following FIRs filed by Indiabulls. Sebi didn’t respond to his mail. An e-mail sent to Sebi in this regard did not elicit any response.”
Royal Canadian Mounted Police informed me though a letter dated September 25, 2013 that Indian authorities are not co-operating with them on this matter,” said Amit Dube, one of the lawyers representing Nitin Mangal.
In October this year, the Delhi High Court, responding to a petition filed by Indiabulls, restrained Veritas from proceeding with the suit in Canada till the case is next heard. The case will now come up for hearing in February 2015. In its petition, Indiabulls alleged that the report published by Veritas was false, misleading, based on concoctions, and defamatory in nature.
They said Veritas had never spoken to them nor verified any facts, figures and data and as a result, the stock price of the Indiabulls companies declined sharply, causing huge loss to the shareholders and the company. Indiabulls also alleged that Monga, Mangal, and Veritas had indulged in extortion and blackmailing.