In its first arrest, the Serious Fraud Investigation Office (SFIO) on Thursday took under its custody the former promoter and managing director of Bhushan Steel Limited, Neeraj Singhal, for siphoning off over Rs 2,000 crore through several loans availed by BSL from the public sector banks using its 80 associate companies.
Neeraj Singhal was produced before the court, which sent him to judicial custody till August 14. Apart from Bhushan Steel, the SFIO is also investigating into the affairs of several of its group companies. "Fraudulent activities contributed to the company becoming insolvent. Bhushan Steel Limited is one of the 12 big cases that had been referred for insolvency resolution by the RBI. Tata Group has taken over management of the company from the Singhals," the Ministry of Finance said in a statement.
.He is accused to be guilty of siphoning off funds of over Rs. 2000 crore from the loans availed by Bhushan Steel Limited using more than 80 companies.
The companies were used for fraudulent activities of rotation of funds through bogus loans & advances, investments, etc.- Ministry of Finance (@FinMinIndia) August 9, 2018
During the investigation, the SFIO team found that former promoters of BSL used a multitude of complex, fraudulent manoeuvres to siphon-off funds amounting to thousands of crores raised by the management of BSL. This has led to wrongful losses to the banks and other investors in these companies.
Singhal has been arrested under Section 212 (8) of the Companies Act, 2013. Based on the material recovered, Neeraj Singhal has also been accused of indulging in serious corporate fraud, punishable under Section 447 of the Companies Act, 2013.
The probe, assigned by the Ministry of Corporate Affairs to the SFIO, was initiated after the ministry received several tip-offs of fraud committed by the BSL promoters. Now the SFIO has said that the accused promoters are not cooperating with the investigation and that they are trying to dodge interrogation. "They have been concealing material facts," said the statement.
Bhushan Steel was among 12 non-performing assets referred for insolvency resolution by the Reserve Bank of India in 2017. After Insolvency Resolution, the ownership and control over BSL, which had a debt of over Rs 50,000 crore, was transferred to the Tata Group. Fair trade regulator CCI on Wednesday approved Tata Steel's proposed acquisition of debt-ridden Bhushan Power and Steel.
(Edited by Manoj Sharma)