The logo of Enforcement Directorate.
Credit: PTI File Photo
New Delhi: The Enforcement Directorate Friday said it has arrested five persons in connection with an alleged Rs 56,000 crore bank loan fraud linked money laundering case against erstwhile Bhushan Steel Ltd.
Former vice president (banking) of the company Pankaj Tewari, former VP (accounts) Pankaj Agarwal, ex-chief financial officer Nittin Johri, Ajay Mittal, the brother-in-law of former promoter Neeraj Singal, and Ajay Mittal's wife and sister of Neeraj Singal, Archana Mittal were taken into custody under the Prevention of Money Laundering Act (PMLA) on Thursday, it said.
They were sent to three days ED custody by a court after they were produced over two days, the agency said.
After completing the corporate insolvency resolution process, Bhushan Steel was taken over by Tata Steel Ltd in 2018.
According to the ED, Bhushan Steel Limited's former managing director Neeraj Singal and his associates formed several shell companies and the promoters and entities linked to BSL "rotated funds from one company to another through a chain of multiple entities" as part of an alleged bank loan fraud.
The money laundering case stems from a charge sheet filed by the Serious Fraud Investigation Office (SFIO), an investigative agency under the ministry of corporate affairs.
"Ajay Mittal and Archana Mittal knowingly received proceeds of crime to the extent of Rs 70 crore. They also mortgaged property of BSL and routed the funds to the family of Neeraj Singal," the agency said in a statement.
It added that Nittin Johri, Pankaj Tewari and Prem Agarwal are ex-employees of BSL who were the "main persons" in-charge of accounts and banking transactions.
"The said three persons are directors in various paper companies managed by Neeraj Singal for rotation of funds. They manipulated the accounts of BSL and were also involved in providing fake documents and details to the bank so as to raise loan funds," it said.
They were "actively involved" in diversion of bank funds, the agency alleged.
Neeraj Singal was arrested by the ED after it raided him in June 2023. A charge sheet under various sections of the PMLA was filed against him and others in August last year. Singal is currently lodged in jail under judicial custody. Assets worth Rs 61.38 crore have also been attached in this case in November, 2021.
Bhushan Steel Limited, Neeraj Singal and his associates formed several "shell" or dummy companies and they rotated funds from one company to another through a chain of multiple entities, the ED said.
The agency alleged that funds were circulated to infuse capital, buy property and for other personal purposes not intended by the banks.
The promoters, directors and the officials of BSL prepared "forged" documents and made fraudulent representations before the banks to discount letters of credit and "diverted" the funds back into their own companies with mala fide intentions, it said.
Investigators suspect that funds were "misappropriated" against the fabricated letters of credit 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 the State Bank of India and the Punjab National Bank," the ED said.