Extraordinary, this — so we’ll just slam up the details from the FSA:
The Financial Services Authority (FSA) has today fined Ravi Shankar Sinha £2.867 million for fraudulently obtaining £1.367 million for himself from a company owned by a private equity fund advised by JC Flowers by means of a fictitious invoicing scheme. The financial penalty consists of £1.367 million disgorgement and a punitive element of £1.5 million. Sinha is also prohibited from performing any function in relation to any regulated activity in the financial services industry.
Between 16 May 2005 and 11 November 2009, Sinha was the chief executive officer of JC Flowers & Co UK Limited (JCFUK). As such he acted as an investment advisor to certain private equity funds (JCF Funds) through a US based private equity firm.
The financial crisis led to a very significant deterioration in Sinha’s financial position from 2007 onwards. He borrowed heavily to finance investments whose performance declined and left him unable to service his debts.
In response to his deteriorating financial position, between 17 February and 26 October 2009 Sinha issued invoices to a company, in which the JCF Funds had invested, for fees payable to himself, to which he knew he was not entitled. In order to secure payment of the invoices, Sinha deliberately misled the company’s CEO by claiming that the payments had been authorised and approved by JCFUK, when in fact no such authorisation or approval had been sought or given. In addition, Sinha dishonestly concealed from JCFUK the fact that he had received the payments from the company.
The final notice (with all the juicy detail) is here.
Remember, Sinha ran JC Flowers’ abortive attempt to take over The Crock.
One quick question. We understand how the FSA feels it needs to use civil proceedings to bring certain financial crooks to book in areas where the law may be vague or overly complex. But this is alleged theft, plain and simple. Why weren’t the police called in and why wasn’t this matter pursued through the criminal courts?
We should also (cough) note this paragraph (5.15) from the final notice:
Mr Sinha complained that the treatment he had received from the FSA had led him to conclude that the authority had prejudged his case and was determined to punish him severely for his misconduct. In support of this contention he highlighted three examples of what he considered to be evidence of inappropriate conduct by the FSA. Mr Sinha suggested that two articles which had appeared in national newspapers about his case included details which would only be known to those close to the case; he speculated that this information could have come from the FSA. He also complained about the disclosure of elements of his case to JCF in their capacity as a third party and he complained that the Warning Notice had been sent to him on the date when he was discharged from bankruptcy.
The FSA subsequently dismissed these claims.
UPDATE
Apparently the cops were called, but City of London police subsequently decided not to pursue a prosecution. We’d speculate that that was because the unnamed company concerned was not keen on pressing for action…
Related links:
FSA probes dealings of former Flowers investor – FT
Flowers: The decline of a dealmaker – FT Alphaville