Mumbai News: CBI Books Palghar-Based Firm, Promoters For ₹975 Crore Bank Fraud

The Central Bureau of Investigation (CBI) has registered a case against a Palghar-based company and its Mumbai-based promoters for allegedly defrauding a consortium of banks, led by Bank of Baroda (BoB), to the tune of ₹975.08 crore between 2014 and 2017. Considering the whopping amount involved in the fraud, which was detected following the submission of a forensic audit report submitted in 2018, the role of bank officials will also be probed.

Scam came to fore in 2018 during forensic audit

The grievance was raised by BoB Stressed Assets Management Department (Mumbai Branch) Deputy General Manager Prahlad Kumar Sinha. On August 9, he filed a written complaint with the central agency's bank securities and fraud wing. In its complaint, the bank alleged that the company enjoyed various credit facilities such as working capital, term loan and non-fund based facilities from the loan availed.

“The borrower company and its promoters/directors in pursuance of a well-knit criminal conspiracy siphoned the funds by entering into fraudulent transactions and circular trading,” read the complaint.

₹64.66 crore used for purposes other than intended

Loans of ₹64.66 crore availed for various projects/capex purposes were utilised for repayment of inter corporate debts, payment to creditors, etc. Apart from diverting funds for purposes other than intended, sale and purchase of materials by the company with some parties seems to be suspicious/ fictitious as no documents or evidence are on record to show the movement of the goods, pointed out the bank.

Company's trade receivables, payables show completely opposite trend

It further said that the company's trade receivables and payables are showing completely opposite trend indicating that it's making prompt payments to its vendors. On the other hand, it's selling products to customers on credit basis without recovering old money, raising serious questions about the firm's policies and indicating fraudulent transactions, the complaint added.

Role of bank officials to be probed as well

On the accusation of circular trading, the bank said that as per the information available in public domain and that received from the company, it was noted that directors/promoters of some business were prima facie company's employees when the fraud took place. The allegation becomes more serious as there are common directors/promoters/shareholders between major debtors and creditors of the company, underscored the bank.