The Securities and Exchange Board of India (SEBI) has upheld its interim restrictions barring Rajesh Mehta, chairman of Rajesh Exports Limited (REL), from buying, selling or otherwise dealing in the company’s securities, citing serious concerns over financial reporting, fund transfers and corporate governance.
In an order dated October 14, Whole Time Member Kamlesh C Varshney confirmed the earlier directions against Mehta and the company, requiring them to cooperate with an ongoing forensic audit and provide complete and accurate disclosures.
The regulator’s intervention follows allegations of significant financial discrepancies, transactions that could not be independently verified and lapses in corporate governance at the listed gold refining company.
Revenue figures raise questions
One of SEBI’s major concerns was the substantial gap between REL’s reported consolidated revenues and the figures recorded by its Swiss operating subsidiary, Valcambi SA.
According to the order, REL reported consolidated revenues exceeding ₹15 lakh crore between FY21 and FY25, while Valcambi’s standalone revenue during the period stood at ₹3,027.38 crore. SEBI highlighted the nearly 99% disparity as a matter requiring explanation.
The regulator also questioned an investment of ₹1,035.27 crore in African gold mines that could not be verified. Additionally, it flagged the netting-off of ₹2,914 crore in overdue trade receivables.
₹77 crore routed through chairman’s personal account
The movement of company funds through the personal bank accounts of Rajesh Mehta and his son, Siddharth Mehta, emerged as another key issue in the proceedings.
SEBI rejected the argument that Mehta was merely acting as an authorised intermediary for commercial transactions. It maintained that routing corporate money through a director’s personal account raises concerns about unauthorised financial arrangements and compliance with disclosure requirements.
The regulator stressed that the eventual use of the money does not automatically legitimise the manner in which it was transferred.
Particular concern was expressed over REL’s admission that ₹77 crore had been routed through Mehta’s personal account for a court deposit to avoid revealing the company’s identity before the Karnataka High Court.
During the hearing, Mehta reportedly argued that the arrangement was intended to preserve plausible deniability regarding the liability of the actual judgment debtor.
SEBI took a dim view of the explanation, stating that deliberately withholding such information from a court undermined confidence in the company’s governance practices. The order described the admission as a serious concern, particularly because the transaction involved directions issued by the Karnataka High Court.
Swiss confidentiality cannot override SEBI requirements
The regulator also rejected REL’s reliance on Swiss confidentiality laws and private non-disclosure agreements to withhold customer and vendor information from the investigation.
SEBI held that private contractual arrangements cannot restrict the exercise of its statutory powers or allow listed companies to sidestep regulatory obligations.
Accepting such a defence, it said, could enable companies to avoid necessary disclosures under the cover of confidentiality agreements, potentially compromising investor interests.
Trading restrictions to continue
SEBI has directed the forensic auditor and investigating authority to accelerate their examination of the matter. It also maintained that continuing the trading restrictions against Mehta was necessary to safeguard public investors and protect the integrity of the securities market.
The order keeps the restrictions in force until further directions, leaving the company’s financial disclosures, disputed transactions and governance practices under regulatory scrutiny.