Tuesday, 9 August, 2022
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ED attaches property worth Rs 4,701 crore in money laundering case involving Sandesara group

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Seizures include 4,000 acres of land, plant machinery and high-end cars; group allegedly involved in money laundering worth Rs 5,000 crore

New Delhi: The Enforcement Directorate (ED) Friday attached movable and immovable properties of the Sterling Biotech Group, worth Rs 4,701 crore, which includes 4,000 acres of land, plant machinery, 200 bank accounts, shares worth 6.67 crore, besides high-end luxury cars.

The seizure was made in connection with the investigation into a money laundering case, worth Rs 5,000 crore, allegedly involving Sterling Biotech, its promoters Nitin Sandesara and Chetan Sandesara and others. The FIR was registered in October 2017. The CBI’s Bank Security and Fraud Cell too had registered a case in the matter.

Arrests and a NPA

Several companies promoted by the Sandesara brothers had allegedly fraudulently obtained credit of over Rs 5,000 crore from various banks on the basis of false and fabricated documents, which subsequently turned into NPAs (non-performing assets).
The loans were reportedly sanctioned by a consortium of banks led by Andhra Bank, UCO Bank, State Bank of India, Allahabad Bank and Bank of India. The fraud allegedly involves various companies of the Sterling Group, including Sterling Biotech, Sterling Port, PMT Machines, Sterling SEZ and Infrastructure and Sterling Oil Resources. Till date, the banks have declared various outstanding loan accounts against the group to the tune of about Rs 5,000 crore.

The ED has so far arrested three persons in connection with the case — Delhi-based businessman Gagan Dhawan, former director of Andhra Bank Anup Garg and Rajbhushan Dixit, director of Sterling Biotech.

Investigation till now

Non-bailable warrants have been issued by a Special Prevention of Money Laundering (PMLA) Court, against several persons, including the Sandesaras.
According to the police, the brothers had allegedly set up over 300 shell and benami companies in India and abroad, which were used to divert loan funds.

“Shell companies were made, balance sheets were manipulated, turnovers were inflated, and insider share-trading was done. These shell and benami companies were controlled by the Sandesaras through dummy directors, who were otherwise their employees. Bogus purchases were shown between the benami companies and the Sterling Group, in order to divert the loan funds and inflate turnovers so as to obtain further loans from banks. The loan funds were rotated in multiple layers through the various shell and benami companies to conceal the source of such funds,” an investigator said.

“A lot of material connected to the formation and management of the various shell and benami companies, such as original cheque books, rubber stamps, company seals, original property documents, original PAN cards, and more than 10 lakh pages of other incriminating documents were then recovered during raids that were a major breakthrough,” he added.

So far, the ED has carried out over 50 searches at various premises in multiple cities including Delhi, Mumbai, Vadodara, Ahmedabad and Surat.

Property and posh cars

The siphoned off loan funds were allegedly used to buy properties in the names of various companies, and to purchase shares of Sterling Biotech and Sterling International Enterprises. This, investigators say, was done to attract investors and project a healthy picture of the company.

The brothers also allegedly bought many luxury cars including Porsche, Range Rover, Audi, Mercedes, BMW.

Investigators say that around Rs 140 crore was allegedly withdrawn from bank accounts of various shell companies that was then used to buy jewellery. “Some of the diverted loan funds were also paid to public servants. We also suspect cross-border transactions undertaken by the group,” an investigator said.

The Sandesaras are into oil business and own several rigs, barges and oilfields across Nigeria. They also run businesses in Mauritius, UAE, British Virgin Islands, Seychelles and USA, among other countries. More than 50 foreign bank accounts and several other assets and properties situated abroad, related to the Sterling Group, are also under the scanner of the ED.

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  1. This is the right approach. Prosecution of offenders takes a long time in the clogged judicial system. The first priority should always be to recover as much as is possible. Given the time value of money, as soon as possible.

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