Former JC Flowers chief executive banned and fined £2.9m

Amy King
31 January 2012

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The FSA has banned former chief executive of JC Flowers UK Ravi Shankar Sinha and fined him ТЃ2.9m after the discovery that he had illegally obtained ТЃ1.4m through a fraudulent invoicing scheme.

Sinha has been ordered to repay the £1.4m he derived through the scheme alongside a £1.5m punitive measure.

Between May 2005 and November 2009 Sinha acted as CEO of JC Flowers UK, the UK-based arm of US private equity firm JC Flowers & Co of which he was previously a managing director. JC Flowers UK recommends potential investments in Europe to JC Flowers in the US, monitors investments made through the firm's vehicles and advises the management of its portfolio companies.

In January 2009, Sinha approached the CEO of a JC Flowers portfolio company in order to take out a €248,396.67 loan - equal to an overdue payment on a bank loan he owed - which he claimed had been authorised. Sinha established a fraudulent loan agreement between the portfolio company and JC Flowers.

In April that year, Sinha informed the CEO of the portfolio company that JC Flowers had authorised him to charge fees relating to the advisory services he had provided. The fraudulent invoice was made payable to his personal account.

The former JC Flowers' CEO assured the portfolio company that the invoiced payments had been authorised and approved by JCF. He also concealed the payments from JC Flowers. The private equity firm fired Sinha in 2009 upon the discovery of fraudulent activity and reported him to the FSA.

According to the FSA's final notice, between February and October 2009, Sinha engaged in ‘dishonest, deliberate and sustained course of misconduct', resulting in a ban from any future involvement in the financial services ‘on the grounds that he is not a fit and proper person' for employment in the sector.

Between May and July 2008, he borrowed up to €9m in order to make personal investments in JC Flowers' portfolio companies, in part to demonstrate his commitment to their success. As the value of the companies plummeted in the financial crisis, so too did Sinha's personal finances; in 2011 he declared bankruptcy.