Money laundering: BIG SETBACK! Rs 4,025 cr assets of Bhushan Power and Steel attached - Check investigative revelations

In a major setback for Bhushan Power and Steel Limited (BPSL), the Enforcement Directorate (ED) has attached the immovable properties worth Rs 4,025.23 crore. The action by ED took place connection with a money laundering case against the firm for siphoning off funds obtained as loans from various banks and financial institutions, the agency said on Saturday. The attached assets include land, building, plant and machinery of BPSL in Odisha.

"The quantification of the Rs 4,025.23 crore attached assets is interim as of now and investigations to identify further proceeds of crime are under progress," the ED said.

ED attaches land, Building, Plant & Machinery of Bhushan Power & Steel Limited, Odisha worth ₹ 4025 crore under PMLA in a #bankfraud case.

— ED (@dir_ed) October 12, 2019

What do investivations reveal?

Investigations conducted under Prevention of Money Laundering Act (PMLA) revealed that BPSL had used various modus operandi to siphon off funds obtained as loans from various banks and financial institutions, said the ED, adding an amount of Rs 695.14 crore was introduced as capital by Sanjay Singal and his family members in BPSL out of artificially generated Long Term Capital Gains (LTCG) by diversion of bank loans fund of BPSL. LTCG was exempted from Income Tax during the relevant time, said the agency.

"BPSL had made payments to various entities by way of RTGS against fictitious purchases of capital goods. In lieu of the RTGS payments, these entities had transferred cash to BPSL which was ultimately traced to have been used for generation of artificial LTCG by jacking up the prices of penny stocks by way of synchronized trading."

Another amount of Rs 3,330.09 crore invested as equity (share capital and premium) by promoter companies was also found to have been routed out of the funds obtained as various loans from banks diverted from accounts of BPSL in the shape of advances shown to various shell companies operated by the different entry operators, said the agency.

According to the agency, investigations till date have revealed circular diversion of funds totaling to Rs 4025.23 crore which is related to criminal activity of scheduled offence.

"These proceeds of crime (amount) were laundered by way of introduction into the books of accounts as equity for window dressing the debt equity ratio."

Investigations have further revealed that, during the relevant period when the loan funds were diverted and reintroduced as equity, BPSL had acquired land, building and plant and machinery worth thousands of crores of rupees at its Odisha plant, the ED said.

ED took over the case based on FIR registered by the Central Bureau of Investigation (CBI) under charges of criminal conspiracy, cheating and forgery of Indian Penal Code and under sections of Prevention of Corruption Act against BPSL, its CMD Sanjay Singal and others.