A wind power tycoon secretly borrowed £1.8million from his business to spend on buying personal property.
Ravi Kailas, 51, co-founder and chairman of Mytrah Energy, took out the illicit loan last month without the approval of the company’s board.
Independent directors of the firm, which is listed in London, eventually found out and were forced to reveal what had happened to the stock market.
They have hired a law firm to investigate – but Kailas, who promised to repay the full amount by the end of next week, has not been fired or suspended.
Ravi Kailas, 51, co-founder and chairman of Mytrah Energy, secretly borrowed £1.8m from his business to spend on buying personal property
Kailas is a serial Indian entrepreneur with a master’s degree from Stanford University in the US who spends about half his time in Britain.
He owns 57.9 per cent of the business through a trust in Jersey, meaning he can overrule the objections of other investors who might want the affair handled differently.
Mytrah has previously said it hopes to become India’s largest independent power firm by betting big on renewable energy.
The business controls more than a gigawatt of wind farms and is developing 500 megawatts of solar energy across the country – enough combined power to run 420,000 homes.
In a statement, the business said: ‘The independent members of the board have been advised that a loan of $2.4million (£1.8million) was made in early September 2017 to the company’s chairman, Mr Ravi Kailas, for the purchase of a property which is not related to the company’s operations.
‘The loan was made without prior approval of the board. Mr Kailas has made arrangements for the full amount of the loan to be repaid by the end of next week.
‘As a consequence of the above, the Board intends to engage an independent law firm in order to assist in a comprehensive review of the transaction.’
Shareholders will be updated when the review is complete.
The scandal will be seized on by critics of the London Stock Exchange’s junior AIM market, often described as the ‘Wild West’ of investing due to a steady stream of crises over corporate governance.
Hargreaves Lansdown analyst Laith Khalaf said: ‘There are lots of decent companies on AIM – including some very big public ones – but equally you can get smaller firms with potentially lower levels of governance.
‘It’s fair to say that’s a risk of going to the AIM market without doing your homework.’
Shares in Mytrah fell 16.6 per cent, or 4.73p, to 23.77p yesterday.