Serious Fraud Investigation Office (SFIO) on Monday filed a 70,000-page complaint in the matter of Bhushan Steel Limited (BSL) at a special court here in Dwarka.
According to the complaint, BSL had defaulted on loans following which the banks had to take a haircut of more than Rs 20,000 crore as a part of the resolution process.
SFIO had earlier arrested Neeraj Singal, former Managing Director (MD) of BSL and Nittin Johari in the ongoing case. Singal is currently out on the interim bail.
The investigation of SFIO had among other things unearthed fraudulent misuse of Letter of Credits (LoCs) to the tune of around Rs 45,000 crore by the two along with BB Singal, former chairman of BSL in collusion with others.
According to the complaint, the gross misuse of the first time adoption of Indian Accounting Standards (IndAS) in misstating the financial statements of the company by fraudulently overvaluing their assets by around Rs 15,000 crore to inter alia write off inventory of around Rs 6000 crore, trade receivables to the extent of Rs 1250 crore.
The fraudulently inflated inventory was used to raise credit from banks.
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The promoters used more than 150 companies to build a complex web of transactions to carry out the siphoning off funds to hoodwink the lenders and other investors in the company.
The SFIO investigation revealed the promoters ran the listed company more like a proprietorship concern and reduced corporate governance requirements to paper formalities.
The complaint further says the BSL had highly knowledgeable and distinguished experts on its Board of Directors as independent directors and nominee directors of banks, who turned a blind eye on the fraudulent activities and financial shenanigans of the promoters.
The role of statutory auditors has again come in focus with their conniving role coming out in the open. SFIO has also raised questions on the role of bank officials in perpetuating the fraudulent activities.