Multiple transfers from a bank in Latvia and two electronics firms in the UAE and a series of circular transactions with a Dubai company are among the financial transactions linked to Bhushan Steel Ltd red-flagged by foreign banks to the US Financial Crimes Enforcement Network (FinCEN), according to records investigated by The Indian Express.
These transactions, totalling $4.39 million, figure in several Suspicious Activity Reports (SARs) sent between 2012 and 2015 to the US regulatory agency that enforces money laundering laws, the records show.
In 2017, two years after the last of these SARs were sent to FinCEN, the RBI initiated bankruptcy proceedings against Bhushan Steel for alleged loan defaults worth Rs 56,000 crore, triggering probes by the Serious Fraud Investigation Office (SFIO) and Enforcement Directorate (ED).
A year later, the company, which was once India’s third largest secondary steel producer and flagship of Bhushan Group promoted by Neeraj Singal and his father Brij Bhushan Singal, was acquired by Tata Steel for Rs 35,232 crore through the insolvency process.
Some of the SARs related to Bhushan Steel focus on nested money transfers involving Meridian Trade Bank, in Latvia on behalf of a London-based entity. Nesting is a route taken to mask the money trail and occurs when a foreign bank uses the correspondent US account of another bank for its customers. For FinCen, nesting is of particular concern when banks conduct transfers on behalf of suspected shell companies.
Records show that Bank of New York Mellon (BNYM) flagged at least three nested transactions worth $454,822 from Meridian Trade Bank on behalf of London-based Randview LLP between 2014 and 2015. These wire transfers were received in the accounts of Bhushan Steel at Canara Bank and ICICI Bank, and part of 126 alleged suspicious transactions pertaining to Meridian Trade Bank that were reported by BNYM in 2015.
“The wires, all flowing through non-BNYM customer Meridian Trade Bank, are primarily suspicious because many of the entities banking with SMP Bank (now Meridian Trade Bank) appear to be shell-like entities banking in the high-risk jurisdiction of Latvia but purportedly located in other jurisdictions,” said one of the SARs.
Randview LLP, according to UK Companies House, was set up in London in 2011 by two Mauritius-based intermediary firms — Newcombe Limited and Glaisdale Limited. Incidentally, companies in Gambia linked to the two intermediaries figured in the Panama Papers, an ICIJ investigative project in 2018 with The Indian Express.
“BNY Mellon takes its role in protecting the integrity of the global financial system seriously, including filing Suspicious Activity Reports (SARs). As a trusted member of the international banking community, we fully comply with all applicable laws and regulations, and assist authorities in the important work they do. By law, we cannot comment on any alleged SAR we may have filed or that may have been illegally disclosed by third parties to the media,” said a BNYM spokesperson.
Another SAR from Standard Chartered Bank New York flagged alleged suspicious transactions worth $2,761,523 between UAE-based electronics firm, Great Way General Trading FZE, and Bhushan Steel between July and November 2013.
The bank identified 234 transactions worth about $1.15 billion pertaining to Great Way General Trading. It termed the transactions suspicious because the firm was involved in third-party remittances, where funds are transferred with instructions that they be moved further to a third entity, typically an unknown ultimate beneficiary.
Standard Chartered New York also flagged a $386,600 transaction from 2012 between Bhushan Steel and Ultra Grace Ltd, another Dubai–based electronic spare parts dealer. The bank found Ultra Grace’s transactions “inconsistent and unusual” with its main business. The company was also not contactable, said the SAR.
The New York branch also flagged alleged circular transactions from 2012 worth about $797,033.55 between Bhushan Steel and Dubai-based Golden Century Limited, a cosmetics and construction goods manufacturer. The bank identified 208 transactions worth $1.29 billion received and remitted by Golden Century globally between May and December 2013.
According to the bank, the value exceeded the anticipated level of activity that was disclosed when its Dubai branch established a relationship with Golden Century. Some of these transactions were circular, in round dollar amounts, with unidentified entities and in high-risk jurisdictions, records show.
The SAR also identified 12 transactions of Bhushan Steel with Golden Century done through Canara Bank in India. Golden Century was struck off from the UAE company registry in December 2018.
“In 2019, we monitored more than 1.2 billion transactions for potential suspicious activity and screened more than 157 million transactions for compliance with applicable sanctions requirements. The reality of the global financial system is that there will always be attempts to launder money and evade sanctions; the responsibility of banks is to build effective screening and monitoring systems and we work closely with regulators and law enforcement to bring perpetrators to justice,” a Standard Chartered Bank spokesperson said.
Neeraj Singal and his lawyer Ranjana Roy Gawai did not respond to emails, phone calls and text messages from The Indian Express seeking comment. Canara Bank, ICICI Bank and Great Way General Trading did not respond to queries from The Indian Express. Ultra Grace Ltd could not be traced for comment.
In 2018, Neeraj Singal was arrested by the SFIO for allegedly siphoning funds from Bhushan Steel. The SFIO has alleged that Singal and his father used illegal means to receive bank loans worth Rs 45,800 crore between 2013 and 2017.
According to the SFIO, funds were allegedly siphoned through a web of 157 companies of which at least 62 were directly controlled by the Singals, 85 were operated through employees of Bhushan Group and the rest run by entry operators. Currently, Neeraj Singal is out on bail.
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