Authorities in India discover that $240M was embezzled from Zee's books

According to preliminary findings by India's market regulator, Zee Entertainment Enterprises' books have been used to launder 20 billion rupees ($240 million).

According to two individuals with intimate knowledge of the situation, the founders of the Zee Group have been questioned. According to one of the sources, the amount was ten times greater than what the investigators had first calculated.

In early Wednesday trade, Zee's shares fell 11%, continuing a sharp decline in share price since the Japanese company abandoned its $10 billion merger with Sony Group last month.

The founders of the Zee Group, former chairman Subhash Chandra and current CEO Punit Goenka, were actively involved in diverting corporate cash to the group's other listed corporations and businesses connected to its founding owners, according to a report released by the Securities and Exchange Board of India (SEBI) last year. Each of the men has refuted any misconduct.

Zee claimed in a statement that all of the information sought by SEBI has been provided and that the reports and rumors regarding accounting problems within the company were untrue and inaccurate.

The second source said that the regulator is expected to release its final conclusions and sanctions in the middle of April.

Because of unresolved "closing conditions" and leadership conflicts, particularly differences on Goenka's role in regulatory matters, Sony terminated its intended merger between its local unit and Zee. Since the transaction was abandoned, the shares have decreased by almost 25%.

Zee was making a last-ditch effort to reopen talks with Sony in order to save the agreement, according to a story published on Tuesday by India's Economic Times. Zee has refuted any involvement in these kinds of talks.

A ban that barred Goenka from serving on boards was lifted in October by an Indian tribunal, which also gave SEBI eight months to complete its more extensive probes.