The Enforcement Directorate (ED) on Tuesday attached the assets of Simbhaoli Sugars Ltd in Hapur in Uttar Pradesh worth Rs 109.80 crore for defrauding a bank under the provisions of Prevention of Money Laundering Act, 2002 (PMLA), an official statement read.
"The properties included land, buildings and plant and machinery of the company situated at Simbhaoli. The attachment was made under the money laundering act. after the probe agencies like CBI registered a case on the basis of an FIR against Simbhaoli Sugars Ltd and others for cheating and defrauding the Oriental Bank of Commerce on the pretext of financing sugarcane farmers," ED said.
According to the FIR, the company was given a loan of 148.59 crores by the bank for providing assistance to 5762 farmers but the funds were diverted by the company for other purposes.
ED conducted searches at the offices of the company situated at Noida and Simbhaoli resulting in recovery and seizure of incriminating documents.
The investigation revealed that the company was facing a liquidity crunch and approached the bank for sanction of a loan under interest subvention scheme of RBI under a tie-up arrangement with 5762 farmers for financing them for pre and post-harvest assistance.
The ED said the funds meant to be paid by the company to the farmers were not remitted to the accounts of the farmers. "There were serious irregularities in the KYC documents. The loan then turned NPA with Rs 98.7 crore (principal) outstanding and the bank filed a recovery suit before the debt recovery tribunal (DRT)," it said.
During the investigation, the ED found that loan funds were diverted by the company by routing into other accounts and then using it towards.
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"The company thus laundered the funds intended for assistance to the needy farmers, in utter violation of the terms and conditions and the intent of the loan," it said.
It said that instead of settling the entire loan liability, the company again induced the Oriental Bank of Commerce to withdraw the application before the Debts Recovery Tribunal and grant a fresh corporate loan of Rs 110 crore on January 28, 2015 to clear the previous dues.
The company again deliberately failed to repay the said corporate loan and at the time of the FIR, Rs 109.8 crore were outstanding, the ED said.
The company had offered a One Time Settlement (OTS) amount of Rs 14.69 crore against the entire outstanding.
"This highlights an ingenious modus operandi of money laundering by taking huge loans from banks and later settling them at heavily discounted sums, thereby causing huge wrongful losses to lender banks," it said.
Further investigation is under progress.
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