India’s market watchdog, the Securities and Exchange Board of India (SEBI), on Tuesday ordered Indian mining group Vedanta to pay $9.4m (Rs776m) to British company Cairn UK Holdings for delays in dividend payments.
The SEBI said in a 76-page final order on its website that Vedanta must pay the sum within the next 45 days or face further action. The body also banned Vedanta executives, including vice-chairman Navin Agarwal, from India’s securities markets for two months.
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The regulator said in its order that Vedanta, formerly known as Cairn India, had violated Indian laws by withholding dividends that should have been paid to the Cairn UK between January 2014 and June 2017.
Vedanta said on Wednesday in a retaliatory statement that the delay in payment was due to purely “unique circumstances” and that to suggest the amount withheld was done on purpose “defies logic”. It added: “There was absolutely no intent on the part of Vedanta Ltd to withhold the dividend payment from [Cairn UK]. Vedanta has an exemplary record in payment of dividends.” The miner said it will appeal the decision from the SEBI.
Vedanta said it failed to pay dividends because of asset restrictions related to temporary rules from India’s tax department. However, those restrictions expired in March 2016.
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Cairn UK lodged a complaint with the SEBI in 2017. The company claimed that despite reminders and the lifting of restrictions on the year prior, dividends were not paid until June 2017 and Vedanta was therefore liable to pay interest on the delayed dividends.
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By GlobalDataThe order from the SEBI is not Vedanta’s only recent legal trouble. In September last year, a report from the Organised Crime and Corruption Reporting Project alleged that Vedanta ran a “covert” lobbying campaign in India to weaken environmental regulations during the Covid pandemic.
The report revealed minutes from an internal meeting in 2021 that show Indian Government officials raising concerns that a suggestion from Vedanta chairman Anil Agarwal to loosen expansion rules would break the law and give a free pass to unrestrained mining in ecologically sensitive areas. However, by April 2022, the country’s environment ministry has published a memo that scrapped all requirements for miners to hold public consultations when expanding production by up to 40% and requiring only written feedback up to 50%.
