ONE OF the country’s top wilful defaulters, Zoom Developers (P) Ltd, and its promoter are linked to an offshore trust registered in the British Virgin Islands (BVI), according to an April 2013 investigation by The Indian Express and the International Consortium of Investigative Journalists (ICIJ) on investments by Indians in offshore entities in tax havens.
The company, which owes at least 26 state-owned banks close to Rs 3,002 crore, and promoter Vijay Choudhary are linked to Gold Harvest Trust, which was set up on August 23, 2006, and is still active, records show.
While Choudhary is named as the intermediary of the trust, Managecorp Limited is named as the trustee.
Records show that the operation of the trust were carried out from the registered office address of Zoom Developers in Andheri, which has since been attached by the consortium of lenders over default of loans.
Zoom Developers is currently under the scanner of multiple investigative agencies in the country such as the CBI, income tax department and Enforcement Directorate (ED). An email sent to the company secretary of Zoom Developers remained unanswered.
The ED is investigating another Liechtenstein-based trust set up by Zoom Developers called Beverin Trust, as it claims the trust was used to divert loan money. The enforcement agency has also provisionally attached 1,280 acres of land of Zoom worth Rs 1,000 crore in the United States under the Prevention of Money Laundering Act (PMLA).
The CBI is investigating ten cases of cheating and forgery against Zoom Developers and its promoters, and has filed chargesheets in at least five cases so far. A CBI special court has issued a non-bailable warrant against Chaudhary who failed to appear before it in one of these cases.
According to an investigative audit conducted by the lenders, Zoom allegedly diverted loan funds to 350-odd subsidiaries, related parties based in India and abroad, and to purchase jewellery for the wife of its promoter Chaudhary. Several lenders also issued bank guarantees to the company allegedly without due diligence and allowed it to roll over bank guarantees for four years until 2009-10, according to sources familiar with the case. While the value of bank guarantees was Rs 3,000 crore, the collateral with them was only Rs 150 crore, they said.
Zoom Developers’ main business was scrapping a plant and then relocating it. In 2004-05, sources said, the company decided to use five aggregators, mostly from Europe, to get international orders. In this context, aggregators are entities that secure job contracts for a third party.
Zoom used to sign contracts with these aggregators to execute projects for third parties. The aggregators would make advance payments to Zoom and secure this with a bank guarantee from an Indian bank for an equal amount, said sources.
The investigative audit alleges that these project contracts did not have any clause on final payment of money to the company. Some contracts allegedly did not have the name of the third party for which work was being commissioned or the location where work was to be executed, sources said.
The ED has booked two cases related to money laundering and forex violations, and the Economic Offence Wing of Mumbai Police has registered two cases.