The Central Bureau of Investigation (CBI) has registered a case against Loha Ispaat Limited, its chairman-cum-managing director Rajesh Gaurishankar Poddar and others for allegedly cheating a consortium of five banks to the tune of ₹1,017.93 crore.
Among those named as accused in the First Information Report (FIR) are directors Rajesh Mohanlal Agarwal, Sanjay Bansal, Anju Poddar and Manish Omprakash Garg, Loha Investments Pvt. Limited
The company had taken credit facilities amounting to ₹812.07 crore from the consortium involving the Bank of India, Canara Bank, Indian Overseas Bank, Punjab National Bank and the Bank of Maharashtra. The accused persons showed fictitious sales/purchase transactions, fudged the accounts and siphoned off the funds, resulting in non-payment of outstanding loans to the extent of ₹1,017.93 crore.
The alleged fraud took place between April 1, 2012, and March 31, 2017. The FIR alleged that the company had stopped clearance of its letter credit bills and other financial obligations to its lenders in 2014-15 citing various reasons.
The consortium explored the possibility of corporate debt restructuring with a cut-off date of July 31, 2014. A special investigative audit was assigned. It allegedly brought out large scale irregularities. According to the forensic audit reports, there was concentration of sales to siphon off the funds through fictitious trade modes. In 2012-13, the sales were concentrated in just three entities — Aum Impex, Star Offshores and Pioneer Exim, constituting 74.80% (₹2,408.72 crore) of the total.
The next financial year, sales for these entities comprised 67.33% (₹2,370.65 crore), while in 2014-15, the three entities along with Steel Link Impex constituted 91.30% of the sales (₹839.88 crore).
The top 10 third parties covered 86.71% (₹3,238.76 crore) of the total net receipts, said the FIR. The background checks and enquires conducted for the suspect entities at their communication addresses indicated that no substantive business activities were being undertaken from those locations and that their offices were locked.
The audit allegedly revealed improper adjustment entries to accommodate fictitious accounting entries. Also, there was concentration of purchases in 2012-13 from three entities, Marque Global, Greenfield Overseas and Arihant International constituting 70.90% of the total purchases amounting to ₹2,202.47 crore. No purchases were made from them in the next fiscal.
Background checks indicated that in case of Marque Global, no substantive business activities were being performed from its on-paper address. In the two other cases, the office addresses were not traceable. As mentioned in the FIR, the auditors also came across suspicious payee details and various other irregularities.
The account had been declared a non-performing asset with effect from August 28, 2014, by one of the lenders, which classified it as a fraud in February 2019.