Simbhaoli Sugar, OBC tank on fraud probe by CBI

Case registered against UP's sugar factory for defaulting loan

Case registered against UP's sugar factory for defaulting loan

India's federal police had said on Sunday it had filed a fraud case against the executives of Simbhaoli Sugars Ltd for causing alleged losses of Rs 109 crore ($16.85 million) to the state-run bank.

The CBI has named CMD Gurmit Singh Mann, Deputy MD Gurpal Singh, Chief Executive Officer GSC Rao, CFO Sanjay Tapriya and six others, including executive and non-executive directors of Simbhaoli Sugars Ltd, apart from unknown bank officials, in its FIR.

Among the senior management executives of the business is stated to be connected to a leading politician in Punjab. All this adds up to a roughly Rs. 200 crore fraud which the CBI is now investigating.

The lender, Oriental Bank of Commerce, has complained to the CBI on November 17, 2017, but the agency registered a case of criminal conspiracy and cheating on February 22. Previously, CBI rested on OBC's grievance in Dwarka Das case for 6 months.

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Officials said that the bank sanctioned a loan amounting to Rs 148.60 crore in 2011 to the private company for financing individuals, Joint Liability Groups and Self-Help Groups under the tie-up arrangement under the RBI Scheme to 5,762 sugarcane farmers supplying sugar produce to said private company during the period from January 25 to March 13, 2012. According to the FIR lodged by the CBI, there are two loans which are under investigation and both of them are from the same bank, the Oriental Bank of Commerce-Rs 97.85 crore loan which was declared in 2015, and a corporate loan of Rs 110 crore which was used to repay the previous loan.

It ended up that Simbhaoli provided incorrect KYC certificates in the names of farmers. The company transferred diverted the funds from the Escrow account to other accounts maintained by it with SBI, Punjab National Bank and UCO Bank through RTGS. In this manner, OBC declared, Simbhaoli Sugars has actually abused the cash provided by it and "there is clear cut department of funds". The bank had also sanctioned a corporate loan of Rs 110 crore to the company in January 2015 to pay off its outstanding loan, which also turned into a non-performing asset in November 2016.

The OBC adjusted the total liability of Rs 112,94,99,471 of the company on June 30, 2016 by way of deposit of this new corporate loan.

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