New Delhi, June 1 (IANS) The Enforcement Directorate (ED) on Friday said it has attached properties worth Rs 4,700 crore in a Rs 5,000-crore bank fraud case involving Gujarat-based pharmaceutical company Sterling Biotech.
The Directorate has attached properties of Sterling Biotech in Mumbai and Ahmedabad under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, an ED official told IANS.
The official said the attached assets include around 4,000 acres of immovable properties, plant machinery, around 200 bank accounts of various companies and accounts of promoters, shares worth Rs 6.67 crore and various high-end luxury cars.
The ED action comes after the Central Bureau of Investigation (CBI) lodged an FIR against Sterling Biotech, its directors Chetan Jayantilal Sandesara, Dipti Chetan Sandesara, Rajbhushan Omprakash Dixit, Nitin Jayantilal Sandesara and Vilas Joshi, Chartered Accountant Hemant Hathi, Anup Prakash Garg and some unidentified persons in connection with the alleged bank fraud.
Sterling Biotech had taken loans of over Rs 5,000 crore from a consortium of banks led by Andhra Bank which turned into non-performing assets. The total pending dues of the group companies stood at Rs 5,383 crore as on December 31, 2016, said the CBI FIR.
The Directorate said that during the probe, it found that "certain entries" in a diary seized by the Income Tax Department in 2011 showed cash payments amounting to Rs 1.52 crore made to one "Garg, Director, Andhra Bank" between 2008 and 2009 by the Sandesara brothers.
On January 13, the ED arrested Garg. The agency also arrested a Delhi-based businessman Gagan Dhawan in connection with the case in November 2017.
According to the ED officials, the Sandesaras had set up more than 300 shell and benami companies in India and abroad, which were used to divert and misutilise loan funds. The modus operandi of money laundering involved formation of shell or benami companies, manipulating balance sheets, inflating turnovers, insider shares trading, etc.
"These shell and benami companies were controlled by the Sandesaras through dummy directors, who were or are employees of the various companies of Sterling Group," the official said.
According to the agency officials, a major breakthrough in the case came when the agency was successful in recovering truckloads of material connected to the formation and management of the various shell and benami companies, such as original cheque books, rubber stamps, company seals, original property documents, original PAN cards, and more than 10 lakh pages of other incriminating documents.
"This material was recovered from a room in Jogeshwari (East), Mumbai, where it was shifted from various premises and was being concealed to evade seizure," the official said.
To date, the ED has carried out more than 50 searches at various premises in multiple cities including Delhi/NCR, Mumbai, Vadodara, Ahmedabad and Surat, in connection with the case.
The official said the siphoned off loan funds were used to buy properties in the names of various companies, to purchase shares of Sterling Biotech Ltd and Sterling International Enterprises Ltd to attract market fancy and project a healthy picture of the companies, and to purchase luxury cars including Porsche, Range Rover, Audi, Mercedes, BMW etc.
Besides, the loan money was transferred to other companies' accounts, from where an amount of about Rs 140 crore was withdrawn. Such shell or benami companies included Dipraj Trading Ltd., Embio Trading Ltd., Gatsby Trading Ltd., Newport Enterprise Ltd., Raj Bones Ltd., which were also used for various personal purposes such as purchase of jewellery.
Some of the diverted loan funds were also paid to public servants.
The official said that the Sandesaras are into the oil business and own several rigs, barges and oilfields across Nigeria. Apart from this, they have several business concerns in Mauritius, the UAE, British Virgin Islands, Seychelles and the USA, among other countries.
"More than 50 foreign bank accounts and several other assets and properties located abroad, related to the Sterling Group, are also under the ED scanner," the official added.