CBI books SEL Textiles Ltd, directors for cheating consortium of banks of Rs 1,530 cr

The CBI has booked Ludhiana-based SEL Textiles Ltd and its directors for allegedly cheating a consortium of 10 public sector banks to the tune of Rs 1,530 crore through diversion of funds using one of the companies whose name had reportedly cropped up in Panama papers disclosure, officials said on Monday.

The CBI has booked Ludhiana-based SEL Textiles Ltd and its directors for allegedly cheating a consortium of 10 public sector banks to the tune of Rs 1,530 crore through diversion of funds using one of the companies whose name had reportedly cropped up in Panama papers disclosure, officials said on Monday. The directors of the conglomerate Ram Sharan Saluja, Neeraj Saluja and Dhiraj Saluja have also been named as accused in the CBI FIR along with unidentified others, they said. After filing of the case, the CBI carried out searches at the office and residences of accused directors in Ludhiana. The CBI has acted on a complaint from the Central Bank of India which has alleged that SELT and its directors indulged in criminal conspiracy to defraud the banks and divert the loan funds with an intention to misappropriate them between 2009-13, causing a loss of Rs 1,530 crore to 10 public sector banks of the consortium, officials said. Last year, the CBI had booked SELT's parent company SEL Manufacturing Co Ltd (SELM) for causing a loss of about Rs 113 crore to the Bank of Maharashtra. The Central Bank of India has alleged that the company was using "related companies" for diversion of funds.

In its complaint, now part of the FIR, the bank has listed companies having huge business transactions with SELT, including the one suspected to be in Panama paper leaks. None of the companies referred to by the bank have been named as accused in the CBI FIR. Panama Papers disclosure refers to leaked client documents of a Panama-based law firm Mossack Fonseca having information about over two lakh off shore firms. The bank has alleged that these were "not genuine trade transactions".

"The transactions have been made by the company through its directors in connivance with each other not only to divert huge funds with an intention to defraud the complainant bank but also to siphon off public money out of India," it alleged. The bank had said while Ram Sharan Saluja and Neeraj Saluja are based in India, Dhiraj manages the overseas business of the company and lives abroad. However, the agency sources said all the accused directors are believed to be in India. It has requested the CBI to impound the passports of the accused to prevent them from leaving the country.

The Central Bank of India had declared the account as a non performing asset in 2014 and later other banks also followed, they said. The company sought corporate debt restructuring (CDR) during which a special investigative audit was conducted by the banks. The audit showed irregularities on the part of SELT but the company did not provide some critical information to auditors due to which they could not verify most of the details, they said. The complainant bank alleged that even after that, the CDR package financials of the company did not improve. After the declaration of NPA, the banks conducted a forensic audit which revealed large scale diversion of loan funds, the FIR alleged. "Opaque and recalcitrant approach towards lenders and inadequate disclosures during the forensic audit give credence to wilful default impressions," the audit report concluded.

It said company allegedly diverted short term funds for long term use as well as diverted funds for acquiring unproductive assets, creating additional chain of intermediary for purchases beyond its capacity owing to weak financials, the FIR alleged. In its complaint, the bank has alleged that SELM contributed Rs 380 crore.

The audit showed that there was no actual contribution and it was facilitated through the "round tripping" of entries of sales and purchases and adjustment of third party accounts, it alleged. The bank also underlined alleged trading in related companies, diversion of funds and misuse of funds for purposes other than loans were sanctioned, officials added.