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London’s High Court has ruled that a lawsuit alleging Indian financial group IIFL Wealth committed fraud during a takeover deal by failed payments group Wirecard can proceed to trial.
“The claimants have a strongly arguable case, which has a more than realistic prospect of success,” wrote Judge Simon Rainey KC in a judgment published on Thursday.
It is the latest development in litigation related to a series of transactions in 2015 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.
Two former minority shareholders in Hermes allege that they were defrauded when they sold their shares at the €36mn valuation. They are pursuing legal action against IIFL, Shah and the former majority owners of Hermes.
IIFL had asked the court to throw out the claims against it as “time barred” at a hearing in London on March 16.
The case throws a spotlight on IIFL Wealth, which is listed in India under the name 360 One Wam, at a time when the use of fund vehicles based in Mauritius is in focus following 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 its lawyer described in court as the “flip” of Hermes.
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.
Thursday’s judgment said that an August 2015 “telephone call between the claimants (in London) and Mr Shah (in Singapore) was an important aspect of the fraud” as alleged.
IIFL and Shah have denied and disputed the allegations of fraud and dishonesty.
360 One Wam shares closed down 0.5 per cent at Rs434, giving the group a market capitalisation of Rs156bn (£1.5bn).
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