The Serious Fraud Investigation Office (SFIO) made its first arrest on Thursday when it apprehended Neeraj Singal, former promoter and Managing Director of Bhushan Steel in connection with fraud of “thousands of crores” rupees by Bhushan Steel Group of Companies involving public sector banks.
He was sent to judicial custody till 14 August.
“The arrest has been made by in exercise of the powers under section 212(8) of the Companies Act, 2013, based on the material in its possession which has revealed that Neeraj Singal is guilty of indulging in serious corporate fraud punishable under section 447 of the Companies Act, 2013,” an official statement said.
It said during the course of the investigation, the team found that the erstwhile promoters of BSL have used multitude of complex, fraudulent manoeuvres to divert/siphon-off funds amounting to thousands of crores raised by the then management of BSL from public sector banks using its several associate companies. This has led to wrongful losses to the banks and other investors in these companies.
The investigation was assigned by the Ministry of Corporate Affairs to SFIO based on the complaints received from various sources.
It said the erstwhile promoters/ directors of BSL, have not been cooperating during the investigation till now. Apart from failing to appear before the investigation team, the material facts were also concealed.
After Insolvency Resolution, the ownership and control over BSL has been transferred to the Tata Group.
Last year SFIO was granted powers to arrest people for violations of companies law, with the government notifying relevant provisions amid the crackdown on illicit fund flows.