Bank fraud: ED attaches Maharashtra-based steel company’s assets worth over Rs 517 crore

New Delhi, Jun 28 (PTI) The Enforcement Directorate (ED) on Wednesday said it has attached a Maharashtra-based steel company’s assets worth more than Rs 517 crore under the anti-money laundering law in connection with an alleged bank loan fraud of over Rs 895 crore.

The assets, including land, building and machinery, belong to SKS Ispat and Power Limited, the ED said in a statement.

A provisional order for attaching these assets has been issued under the Prevention of Money Laundering Act (PMLA) and their total value is Rs 517.81 crore.

The investigation pertains to a money laundering case based on a Central Bureau of Investigation (CBI) FIR against Tiruchirappalli-based boiler manufacturing company Cethar Limited that “availed” credit facilities of Rs 895.45 crore from a consortium of lenders led by the Indian Bank, SAM branch in Madurai.

The ED said accounts of Cethar Limited turned NPA (non-performing asset) on December 31, 2012 and subsequently proceedings under the Insolvency and Bankruptcy Code (IBC) were initiated before the National Company Law Tribunal (NCLT) in Chennai in 2017.

The role of the steel company came later.

In order to be awarded the engineering, procurement and construction (EPC) contract of SKS Power Generation (Chhattisgarh) Limited (SKSPGCL) for about Rs 3,500 crore, Cethar Limited “siphoned off” Rs 228 crore to its parent company SKS Ispat and Power Limited under the guise of investment in shares, the ED said.

However, it said, the interest accruing at the rate of 12 per cent per annum was kept off the books.

“This money was accounted as trade receivables until 2016-17 when it was written off as loss on sale of investments by creating backdated/forged agreements. This was done just two days prior to the commencement of NCLT proceedings, revealing a heightened degree of criminal conspiracy,” the agency claimed.

It alleged that Cethar Limited director K Subburaj “colluded” with Anil Gupta, CMD of SKS Ispat and Power Limited, with a “criminal intent” to siphon off assets of Rs 793 crore from the books of Cethar, which turned insolvent and resulted in liquidation under the IBC.

“A convoluted scheme of agreements and transactions was created to conceal the proceeds of crime of Rs 793 crore, which were safely parked at SKS Ispat and Power Limited. It used the proceeds of crime of Rs 793 crore for its regular business purpose,” the ED said.

Business assets of SKS Ispat and Power Limited in the form of land, building, plant and machinery along with roads and railway siding worth Rs 517.81 crore have been provisionally attached, the agency said.