Bhushan Steel's former promoter Neeraj Singal held for Rs2,000-cr loan fraud

The Serious Fraud Investigation Office (SFIO) on Thursday arrested Neeraj Singal, former promoter and managing director of Bhushan Steel Ltd, on charges of siphoning bank loans to the tune of Rs2,000 crore.

Singal has allegedly diverted more than Rs2,000 crore of loans taken in the account of Bhushan Steel to 80 different fictitious companies.These companies were mere instruments for rotating funds through bogus loans and advances, as well as investments, according to the ministry of corporate affairs.
Singal was produced before a court, which remanded him in judicial custody till 14 August, according to a statement issued by the ministry of finance and corporate affairs.
Investigation by the SFIO revealed that the former promoters of Bhushan Steel used fraudulent ways to siphon funds raised from state-owned banks using several associate companies. “This has led to wrongful losses to the banks and other investors in these companies.”
This left the steelmaker with overdue loans of Rs56,000 crore. Bhushan Steel was among the first 12 big stressed accounts identified for resolution under the Insolvency and Bankruptcy Code by the central bank.
Lender banks had to take a 37-per cent haircut after Tata Steel Ltd emerged the highest bidder for the troubled company. That came even as SFIO was probing diversion of funds.
The former promoters and directors of the company didn’t cooperate with the agency during its investigation, and tried to conceal “material facts”, according to the ministry’s statement. Fraudulent activities contributed to the company becoming insolvent, the ministry tweeted. Investigation is still on.
Singal was held under Section 212(8) of the Companies Act, 2013, that empowers officers of the rank of director, additional director or assistant director to arrest an offender based on evidence. He is accused of fraud punishable under Section 447 of the act, the statement said. That provides for an imprisonment of six months to 10 years, along with a fine not less than the amount involved in the fraud.