Sharad Pawar says he’ll cooperate with ED, voluntarily go for questioning in MSC Bank case

ED has accused NCP chief Sharad Pawar and many other leaders across parties of money laundering from the Maharashtra State Co-operative Bank.

NCP chief Sharad Pawar addresses a press conference in Mumbai | ANI File Photo

Mumbai/New Delhi: Nationalist Congress Party (NCP) president Sharad Pawar said Wednesday that he plans to fully cooperate with the Enforcement Directorate (ED), which has registered a case of alleged money laundering against him and others, and will voluntarily go to the ED office Friday for questioning.

The ED Tuesday registered a case against Pawar, his nephew and senior NCP leader Ajit Pawar, and several other leaders such as Shiv Sena’s Anandrao Adsul, Peasants and Workers Party’s Jayant Patil, Congress’ Diliprao Deshmukh and Madan Patil, and NCP’s Ishwarlal Jain and Rajendra Shingane, in connection with alleged irregularities in the functioning of the Maharashtra State Co-operative (MSC) Bank.

“I will be touring Maharashtra ahead of the elections over the next month, and if the ED wants to send a message to me, and I don’t reply, there should be no misunderstanding. So, I myself will go to the ED office this Friday at 2 pm and share whatever information the authorities need,” Pawar told reporters in Mumbai Wednesday.

“Maharashtra is a state of Chhatrapati Shivaji and our culture is to never bend before the Delhi seat of power.”

What ED has alleged

The ED has alleged irregularities in loan disbursements by the MSC Bank to co-operative sugar factories, adding that the loans were sanctioned despite the factories having weak financials, in many cases without any collateral. The factories were then shown to be sick and allegedly sold to close relatives of certain politicians.

The case has prompted the NCP to cry political vendetta, especially since the senior Pawar was not a director or a functionary of the bank.

Politically, the timing of the action is also significant as Maharashtra goes to assembly polls on 21 October.

Moreover, there is a strong perception that the BJP-led government has, over the last five years, systematically weakened the NCP and the Congress’ hold on the state co-operative sector, which had been under the control of these two parties for over two decades.

The Devendra Fadnavis government brought several amendments to tighten the screws, including one that bars persons who are being investigated for irregularities in the functioning of these bodies from contesting elections to them.

Pawar’s ‘involvement’ 

Residents of Baramati, NCP supremo Pawar’s home turf, Tuesday called for a bandh, while NCP workers protested outside the ED office against the state government for targeting the former chief minister.

While Pawar was never a director of the MSC Bank, the ED action against him stems from a complaint filed by activist Surinder Arora in 2012, which accused him of “criminal conspiracy and abetment”.

Arora, also the petitioner in the Bombay High Court, told ThePrint: “Sharad Pawar was the kingpin, the main person who was aware of all these illegal loans. The sector was anyway entirely under the control of the NCP at that time.”

A source in the ED said Pawar’s name was added to the list of accused after the Mumbai Police’s Economic Offences Wing (EOW) recorded the statement of a witness who gave “inside details” of how the senior leader had played a key role in the scam. The ED has now asked the EOW office to hand over the statement for further probe.

“The statement mentions Pawar’s role in detail. If required, his statement will be recorded under the Prevention of Money Laundering Act, which makes it permissible in court,” a source said.

The source added that since it is a politically-sensitive case, the ED will first examine bank officials and directors along with promoters of sugar co-operatives, while the Pawars will be called later.

“It is first important to question the bank officials and promoters of these sugar co-operatives who were handling daily developments, audit reports, accounts etc., and will be able to establish a clear timeline of the sequence of events,” the source said.

Case timeline

On 22 August, the Bombay High Court, while hearing a PIL by Arora, ordered the EOW to register an FIR against Ajit Pawar and over 70 others in the MSC Bank case within five days. The prosecution had earlier told the court that an FIR was not registered despite the case dating back to 2010, as the EOW did not find any cognisable offence.

Until 2010, the bank was largely controlled by politicians from the Congress and NCP, and had 44 elected and 33 nominated directors, including Ajit Pawar.

The high court order came nine years after an inspection by the National Bank for Agriculture and Rural Development (NABARD) blamed Ajit Pawar and other leaders for causing losses to the bank by sanctioning credit limits to units with negative net worth. It also accused them of selling properties of borrowing units acquired under the SARFAESI Act of 2002 below the reserve price, delays in initiating legal action against defaulting borrowing units where directors had interests directly or indirectly, and so on.

Moreover, according to the NABARD report, the bank’s accounts did not reflect its true financial position as of 31 March 2010.

In May 2011, the RBI superseded the board of directors and appointed two state government administrators.

Back in 2011, the NABARD report and the RBI’s subsequent action triggered a rift between the Congress and the NCP, with Ajit Pawar slamming the action as politically motivated to defame the NCP and the Pawar family.

The Mumbai Police EOW filed an FIR, and consequently, on 23 September 2019, an ECIR (Enforcement Case Information Report) was recorded against the former chairman, managing directors and directors of the MSC Bank.

‘Favours’ to directors and their kin

A source in the ED said several irregularities were committed to sanction loans to benefit directors of the lending bank.

According to court documents relying on the petitioner’s complaint, a loan of Rs 1.94 crore was sanctioned to one Aditya Fresh Food Natural Private Limited. One of the firm’s directors, Prabhavati Patil, was the wife of Manikrao Patil, then-chairman of the MSC Bank.

The loan committee, comprising leaders such as Ajit Pawar, Prithviraj Deshmukh, D.M. Mohol, Manikrao Patil, Madhukarrao Patil and so on, sanctioned the loan under the ‘Micro/Small scale Aatmanirbhar Yojana’ over four meetings in 2008, though the unit was not eligible for a loan under the scheme.

The ED source quoted above said: “Due to alleged mismanagement and underutilisation of capacity and increasing overhead expenditure, these co-operative sugar factories became sick and were sold by decisions taken by the board of directors at a price much below the reserved price to avail wrongful gains to the purchaser.”

According to the ED, the purchasers of these units had personal or political links to the board of directors, and the consent of borrowing units was not taken before undertaking such sales.

Besides, the directors did not take into consideration the market value, realisable value or the distress value of the property, while in some cases, sales certificate documents were forged, where the actual sale was made at a much lower cost than what was mentioned in the sales certificate. According to the ED, in some cases, the sale was made without inviting tenders.