CARE Ratings extends losses after Sebi directs inquiries into ex-top officials

The board of CARE Ratings (CARE) has decided to terminate the employment of Rajesh Mokashi as managing director (MD) & CEO of the company with effect from 16 July 2019.

Shares of CARE was down 1.06% at Rs 520.80. It has lost 24.46% in eight trading session from its recent closing high of Rs 689.45 reported on 5 February 2020.

The company's board, as advised by Securities and Exchange Board of India (Sebi), vide its letter dated 12 February 2020, has decided to institute an inquiry in the matter of interference by officials of CARE including the erstwhile chairman and the erstwhile MD & CEO in the rating process in the last 3 years.

The board has already initiated the process of appointing MD & CEO of CARE.

Sebi received various whistle blower complaints alleging undue interference in the rating process by the non-executive chairman S. B. Mainak (chairman) and erstwhile managing director Rajesh Mokasbi (erstwhile MD) of CARE.

"As regards the involvement of the chairman of CARE in the rating process, though several observations have been made in the audit report, those have been denied by the chairman. There is evidence in the nature of phone call conversations, WhatsApp messages and statements of employees, based on which auditor has not been able to substantiate the charges of interference in the rating process against the chairman," Sebi in its letter to the board of CARE Ratings said.

The instances of conversations between the chairman and erstwhile MD regarding certain issuers/clients have been clearly brought out in the forensic report. The chairman has stated that these were for the purpose of business development, yet the conversations between chairman and erstwhile MD just before the issuance of rating do not rule out the possibility of the chairman having influenced the rating. As a matter of fact, the auditor has brought out the acquaintance of chairman with the rated entities," Sebi said in the letter to CARE.

"Considering the seriousness of the alleged violations and the observations made in the forensic audit report, the board is directed to institute a full-fledged inquiry in the matter of interference by the officials of CARE, including chairman and erstwhile MD & CEO in the rating process in the last three years," the Sebi letter said.

CARE operates as a credit rating agency. The company offers credit assessment of companies that helps corporates to raise capital and assists the investors to form an informed investment decision based on the credit risk. It serves corporates, financial sectors, state government entities, and local bodies.

Powered by Capital Market - Live News