Former promoter of Bhushan Power & Steel (BPSL) Sanjay Singal was on Friday put under arrest by the Enforcement Directorate (ED) for alleged money laundering. The agency had already questioned him thrice in connection with its case emanating from a bank loan fraud matter.
Earlier, on October 10, the agency had attached the entire plant of the company worth Rs 4,025 crore in Village Thelkoloi in Odisha’s Sambalpur. The attachment was released by the National Company Law Tribunal (NCLT) within a few days, but the agency challenged the order. The validity of attachment is currently being argued in the tribunal.
The money laundering probe is based on a CBI FIR registered in April this year in which it was alleged that BPSL, through its directors/staff, fraudulently diverted Rs 2,348 crore (approx) from the loan account of Punjab National Bank (Delhi and Chandigarh), Oriental Bank of Commerce (Kolkata), IDBI Bank (Kolkata) and UCO Bank (Kolkata) into the accounts of various companies or shell companies without any obvious purpose and thereby misused the funds.
“It was further alleged that the company availed various loan facilities from 33 banks/financial institutions during the year 2007 to 2014 to the tune of Rs 47,204 crore (approx) and defaulted on repayments. Subsequently, lead bank PNB declared the account as NPA (non-performing asset) followed by other banks and financial institutions,” a CBI statement had said.
“It was also alleged that the accused entered into a criminal conspiracy among themselves and with unknown public servants of banks and others to cheat banks. In furtherance of the said criminal conspiracy, the accused dishonestly and fraudulently diverted huge amount of bank funds through companies/shell companies/entities etc. and deliberately defaulted in repayment and also claimed inadmissible CENVAT credit etc,” the statement added.
The CBI further accused the company of using the bank funds for the purpose other than sanctioned by the bank, by committing forgery for the purpose of cheating, used forged documents and falsified the accounts causing loss to the tune of Rs 2348 crore (approx) to the lending banks.
In a statement on October 12, ED had claimed, “An amount of Rs 695.14 crore was introduced as capital by Sanjay Singal (the then CMD of the company) and his family members in BPSL out of artificially generated long-term capital gains (LTCG) by diversion of bank loans fund of BPSL”. LTCG was exempted from income tax during the relevant time, the Directorate had said.
It alleged BPSL had also made RTGS payments to various entities against “fictitious purchases” of capital goods. Against RTGS payments, these entities had transferred cash to BPSL which was ultimately traced to have been used for generation of artificial LTCG by jacking up the prices of penny stocks by way of synchronised trading, the ED said. Another amount of Rs 3,330 crore invested as equity (share capital and premium) by promoter firms was also found to have been routed out of the funds obtained as various loans and diverted from accounts of BPSL in the shape of advances shown to various shell companies operated by the different entry operators, the agency had alleged.
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