ED Raids Multiple Locations In Leeway Logistics’ ₹173-Crore Loan Diversion Bank Fraud Probe

Mumbai: The Enforcement Directorate (ED), Mumbai Zonal Office, on November 18 conducted search operations at multiple locations across Mumbai, Delhi and Gurugram under the Prevention of Money Laundering Act (PMLA), 2002, in connection with an alleged bank fraud involving Leeway Logistics Ltd.

According to the agency, the searches led to the freezing of fixed deposits and mutual funds worth Rs 51.81 lakh, and the seizure of gold coins and a gold bar valued at Rs 84 lakh. Officials also recovered a large number of incriminating documents.

The ED’s investigation stems from an FIR filed by CBI's Banking Security & Fraud Branch (BS&FB), Mumbai, against Leeway Logistics, its directors and guarantors. The FIR was based on a written complaint filed on September 14, 2022 by Bank of India's asset recovery management branch's deputy general manager Rakesh Kumar Garg. The complaint alleged that Leeway Logistics Ltd, its directors, guarantors and several unknown public servants were involved in a criminal conspiracy between 2013 and 2016 to cheat a consortium of banks comprising Bank of India, Union Bank of India, Canara Bank, State Bank of India, Bank of Maharashtra, IDBI Bank, Indian Overseas Bank and Andhra Bank (now Union Bank).

According to the complaint, the company availed Rs 167.50 crore in credit facilities from the consortium and caused a loss of Rs 173.18 crore through large-scale diversion of funds. The complaint states that the company siphoned money by transferring funds to its sister concerns, Leeway Management Pvt Ltd, Leeway Infrastructure Pvt Ltd, Leeway Manpower Pvt Ltd, and Leeway Fleet Management Services Pvt Ltd, in violation of sanction terms.

Investigation also alleged that the company engaged in round-tripping with entities such as Pentacle Tradeline Pvt Ltd, Aster Commercial Pvt Ltd, Sunberry Commercial Pvt Ltd, Ram Traders, Mangalam International, Shiva International and Hanuman Enterprises. The firm also paid unusually high remuneration to its directors despite being under financial stress, submitted differing debtor lists to banks, and allowed Letters of Credit (LCs) to devolve by failing to honour payments.

According to the investigation, transactions were also carried out with non-consortium banks without mandatory permissions.

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ED officials said the investigation has revealed that Sanjay Sinha, director of Leeway Logistics, allegedly created multiple dummy entities with associates to route loan funds and artificially inflate the company’s turnover to secure higher credit limits. Large cash withdrawals were also detected from these dummy entities, allegedly used to siphon off loan proceeds. The company’s account was declared NPA on September 30, 2016.

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