Indian financial group IIFL Wealth has asked a judge in London’s High Court to throw out a claim that it had some responsibility for an alleged fraud tied to the largest takeover by failed payments group Wirecard.
The hearing on Thursday was the latest step in litigation related to a series of 2015 transactions in which Amit Shah, a co-founder of IIFL Wealth, allegedly arranged for an investment fund to buy an Indian business called Hermes for €36mn and then sell it to Wirecard weeks later for €326mn.
The case against IIFL Wealth comes at a moment of intense international focus on the use of Mauritian fund vehicles, following short seller allegations of market manipulation against Indian conglomerate Adani. The Adani group has denied wrongdoing.
IIFL Wealth established and administered a Mauritian fund used in what the court heard was the “flip” of Hermes, as part of a claim from two former minority shareholders in the business that they were defrauded when they sold their shares at the €36mn valuation.
The Financial Times has previously reported that James Henry O’Sullivan, 48, an Englishman awaiting trial in Singapore on allegations he helped forge documents central to Wirecard’s accounting fraud, directed the Indian “flip” and used the IIFL fund to hide his involvement in the transactions, according to whistleblowers and documents that show his collaboration with Shah.
The transactions are the subject of criminal investigations in Mauritius, India and Germany. No person has been charged in relation to these probes.
Wirecard, which collapsed in June 2020 after a multibillion-dollar accounting fraud, is not a party to the claim after an English court ruled in related proceedings a month later that the “inherent probability” was that the payments group did not know the price at which Hermes was sold to the Mauritius fund.
In 2017, minority shareholders filed a suit against Shah, an IIFL Wealth UK subsidiary, and two Indian brothers who were the majority owners of Hermes before the “flip”. The brothers failed in an attempt to have jurisdiction in the case moved to India.
In February 2022, the minority shareholders filed fresh claims against IIFL entities in Mauritius and the UK, and Thursday’s hearing concerned procedural arguments about whether that suit was lodged too late and so was “time barred under English law”.
Arguments in court on Thursday centred on when it was reasonable to expect them to have lodged their…
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