The Enforcement Directorate has arrested five persons in connection with the alleged ₹56,000-crore bank loan fraud committed by Bhushan Steel Limited and others.
The arrested persons have been identified as Ajay Mittal, brother-in-law of promoter Neeraj Singal; his wife and the promoter’s sister, Archana Mittal; Bhushan Steel’s then chief financial officer Nittin Johari; then vice-president (Banking) Pankaj Kumar Tewari; and then vice-president (Accounts) Pankaj Kumar alias Pankaj Agarwal. The agency has three days’ custody of the five persons.
The ED had initiated the investigation based on the prosecution complaint filed by the Serious Fraud Investigation Office against Bhushan Steel. The complaint had invoked scheduled offences under the Prevention of Money Laundering Act (PMLA).
The agency found that the erstwhile Bhushan Steel and its managing director, Mr. Singal, and his associates had formed several shell companies. “They rotated funds from one company to another through a chain of multiple entities. The funds were circulated to infuse capital, buy property and for other personal purposes not intended by the banks,” said the agency on Friday.
As alleged, promoters/directors and the officials of Bhushan Steel had prepared forged documents and made fraudulent representations before the banks to discount letters of credit (LCs) and diverted the funds back into their own companies with mala fide intentions. “Funds were misappropriated against the fabricated LCs created in favour of JSW Steel Limited and Hindustan Zinc Limited. The misappropriated funds were diverted to other group/associated companies, causing wrongful loss to State Bank of India and Punjab National Bank,” it said.
On November 8, 2021, the ED had provisionally attached assets worth ₹61.38 crore. The provisional attachment order was confirmed by Adjudicating Authority on July 24, 2022.
The agency had also arrested Mr. Singhal after conducting a search on his premises on June 9, 2023. He is currently in judicial custody. The ED filed a prosecution complaint against him and a few other accused persons on August 8, 2023. The court concerned took cognisance of it on November 7, 2023.
Earlier, on October 13, 2023, the agency had carried out searches with respect to certain persons linked to Bhushan Steel. It found that Mr. Mittal and his wife knowingly received “proceeds of crime” to the extent of ₹70 crore. They also mortgaged Bhustan Steel’s property and routed the funds to the family of Mr. Singal, said the agency.
The other three accused were employees of Bhushan Steel. They were allegedly in charge of the accounts and banking transactions. “The said three persons are directors in various paper companies managed by Mr. Neeraj Singal for rotation of funds. They manipulated the accounts of BSL [Bhushan Steel Limited] and were also involved in providing fake documents/details to the bank so as to raise loan funds. Thereafter they were actively involved in the diversion of bank funds,” it added.
