The Enforcement Directorate (ED) Friday attached assets worth over Rs 4,700 crore belonging to the Sterling Biotech group from Gujarat. The assets have been attached in connection with a money laundering probe the agency is conducting against the company for defaulting on loans.
The company, owned by the Sandesara family from Vadodara, is alleged to have defaulted on loans amounting to Rs 5,363 crore taken from a consortium of banks. The ED and Central Bureau of Investigation claim that most of this money has been siphoned off by the Sandesaras.
ED officials claimed that some of the funds siphoned away were used to bribe ‘public officials’. A top Congress leader’s name has been dragged into the case based on statements of certain witnesses. The Congress leader has denied the allegations.
What has been attached
On Friday, the ED said it has provisionally attached movable and immovable properties of Sterling Biotech Group that are worth an estimated Rs 4701 crore.
The attached assets include immovable property like farm houses, factory premises and apartments across Gujarat and Mumbai. Apart from this, the agency has also attached plant machinery, around 200 bank accounts of various companies and the group’s promoters, shares worth Rs 6.67 Crores, and high-end luxury cars.
What the ED alleges the Sandesaras did
“Several companies promoted by the Sandesara brothers had, on the basis of false and fabricated documents, fraudulently obtained credit facilities of more than Rs 5000 Crores from various banks, which subsequently turned into NPAs. The loans were sanctioned by consortium of banks led by Andhra Bank, UCO Bank, State Bank of India, Allahabad Bank and Bank of India.
“Till date, the banks have declared as fraud, various outstanding loan accounts to the tune of about Rs 5000 Crores in respect of various companies of Sterling Group, including Sterling Biotech Ltd., Sterling Port Ltd., PMT Machines Ltd., Sterling SEZ and Infrastructure Ltd and Sterling Oil Resources Ltd,” a ED statement said.
The agency already has already obtained non-bailable warrants issued against several persons, including the promoters of Sterling Biotech, Nitin Sandesara and Chetan Sandesara.
The agency says that the Sandesaras had set up over 300 shell, and benami, companies in India and abroad.
“The modus operandi of money laundering involved formation of shell/benami companies, manipulating balance sheets, inflating turnovers, insider shares trading, etc. These shell and benami companies were controlled by the Sandesaras through dummy directors, who were/are employees of the various companies of Sterling Group. Bogus sale/purchase was shown between the benami companies and the Sterling group of companies in order to divert loan funds and inflate turnovers to obtain further loans from banks,” the statement from the ED said.
The agency alleged that the funds were rotated through the various shell and benami companies to conceal the source.
The funds were then allegedly used to buy properties in the names of various companies. In addition, the funds were allegedly used to purchase shares of Sterling Biotech Ltd and Sterling International Enterprises Ltd to make investors believe it was a healthy company. Luxury car brands like Porsche, Range Rover, Audi, Mercedes and BMW were also purchased.
The agency claims that the Sandesaras withdrew about Rs 140 crore in cash from the bank accounts of various shell companies, and then used it for personal expenses like the purchase of jewellery.
The Sandesaras have investments in the oil sector, and own several rigs, barges and oilfields across Nigeria. Apart from this, they have several business concerns in multiple nations including Mauritius, UAE, British Virgin Islands, Seychelles and USA. The ED is also examining over 50 foreign bank accounts, and several other assets and properties situated abroad that belong to the group.
How the ED stumbled on the case
The ED says it stumbled upon the details of shell companies owned by Sandesaras during a raid it conducted in a premise connected to the company in a Mumbai suburb. The agency conducted at least 50 raids across Delhi, Mumbai, Surat and Ahmedabad and Vadodara since October 2017, and claims to have recovered incriminating documents related to the shell companies.
Three people – Delhi-based businessman Gagan Dhawan, the former Director of Andhra Bank, Anup Garg, and the director of Sterling Biotech Ltd, Rajbhushan Dixit – have been arrested so far. The agency has also filed multiple prosecution complaints.
Sterling Biotech Limited plant in Ooty, Tamil NaduThe ED’s case is based on a CBI case filed on October 25, 2017.
The CBI FIR, registered under various sections of the Indian Penal Code and the Prevention of Corruption Act, names Sterling Biotech, its directors Chetan Sandesara, Dipti Sandesara, Rajbhushan Dixit, Nitin Sandesara, Vilas Joshi, chartered accountant Hemant Hathi and then director of Andhra Bank, Anup Garg, among the accused.
The CBI alleged that the company had falsified its records, including turnover, profits, income tax returns and balance sheets to get loans and later diverted the money for “personal purposes”. The CBI alleged that the company even falsely represented its market capitalisation, indulged in insider trading and was laundering money.
The CBI alleged that the Sandesaras were regularly paying Andhra Bank director Anup Garg in Delhi using cash couriers.