And now, CBI files FIR on Rs109-cr loan fraud by CMD of Simbhaoli Sugars

The Central Bureau of Investigation (CBI) has filed a case against UP-based Simbhaoli Sugars Limited, one of the largest sugar refining companies in India, for allegedly cheating Oriental Bank of Commerce of Rs109 crore in 2011 on the pretext of financing sugarcane farmers.

CBI in its FIR has named Simbhaoli Sugar's chairman and managing director Gurmit Singh Mann, deputy managing director Gurpal Singh and eight others, including CFO, executive and non-executive directors of the company apart from some officials of the bank.

While Gurpal Singh is deputy MD of the company, Simbhaoli's website projects him as CMD and a director.

One of the senior management executives of the company is said to be related to a top political leader in Punjab.

This is the second FIR in three days registered by CBI on the complaint of OBC pertaining to bank fraud.

The CBI, however, seems to have failed to act promptly in this case as well – while the agency took six months to file FIR In the Rs390-crore loan fraud committed on OBC by Karol Baug, Delhi-based diamond trader Dwarka Das Seth International, it was sitting on the Chomoli Suhar case from 17 November 2017.

The CBI's actions also raises suspicions on the way the central ageny's lackadaisical approach that only helps culprits to escape the law.

The latest FIR filed by CBI alleges that Simbhaoli Sugars approached OBC in December 2011 with a proposal for a loan amounting to Rs148.59 crore to finance sugarcane farmers under the tie-up arrangement with the company (with a maximum limit of Rs3 lakh per farmer).

The company is reported to have supplied fake names and other details like individual land holdings and the quantity of cane supplied by them in the previous season to the bank. It also failed to submit the KYC and other requisite documents along with the loan application of individual farmers.

The bank's Hapur branch disbursed loans totalling Rs149.59 crore to 5,762 farmers between January and March 2012. The loans were disbursed through individual loan accounts opened for farmers and consolidated amount of each disbursement was credited in the Escrow (current) account of Simbhaoli Sugars on the basis of undertaking given by the company that inputs like seed, fertilizers and other necessary equipments etc have been supplied by it to all the individual farmers.

The KYC certificates of farmers supplied by Simbhaoli were fake the company diverted the funds from the Escrow account to other accounts maintained by it with SBI, Punjab National Bank and UCO Bank through RTGS. This way, OBC claimed, Simbhaoli Sugars has misappropriated the money lent by it and ''there is clear cut division of funds''.

The loan account of Rs148.59 crore was declared non-performing asset (NPA) in March 2015 and a fraud in May 2015 for an outstanding amount of Rs97.85 crore.

OBC, meanwhile, sanctioned another corporate loan of Rs110 crore to Simbhaoli, over and above the Rs148.59 non-performing loan under multiple banking arrangements in January 2015 to pay its outstanding loan of Rs97.85 crore.

''They (bank) adjusted the total liability of Rs112.94 crore of company in June 2016 by sanctioning this new corporate loan,'' says CBI.

The corporate loan also turned NPA on 29 November 2016, thus resulting in its first outstanding loan of Rs97.85 crore (as alleged fraud) and the fresh corporate loan of Rs 109.08 crore (as fresh outstanding), said CBI Abhishek Dayal.

The CBI has searched eight premises, including residences of directors of Simbhaoli, its factory, corporate office and registered office in Delhi, Hapur and Noida, only after filing the FIR four months into reporting the case.