New Delhi: In a significant development in the ongoing war against bank fraud, Dubai authorities have reportedly arrested Nitin Sandesara, one of the co-accused in the Sterling Biotech loan fraud case amounting to Rs 5,383 crore.
Two months ago, the Enforcement Directorate (ED) had filed a charge sheet against Rajbhushan Dixit, director of Sterling Biotech, in the case. Sources close to developments revealed to FC that Nitin Sandesara is likely to be deported to India shortly because CBI, the nodal agency, has been informed by Interpol of the grab.
This is a big catch. Nitin Sandesara was an absconding director of Sterling. Official sources said Sandesara was arrested by Dubai police based on a non-bailable arrest warrant issued by an Indian court.
“The legal process post the arrest is taking place in Dubai. We are waiting for details. Indian agencies will try to get him deported,” a senior official said. Indian probe agencies had information on Nitin Sandesara being in Dubai, following which the authorities alerted the officials in the United Arab Emirates. The company and its directors are being probed.
CBI has booked Vadodara-based Sterling Biotech, its directors Chetan Jayantilal Sandesara, Dipti Chetan Sandesara, Rajbhushan Omprakash Dixit, Nitin Jayantilal Sandesara and Vilas Joshi, chartered accountant Hemant Hathi, former director Andhra Bank Anup Garg and some unidentified persons in connection with the alleged bank fraud case.
This would be the biggest win in terms of a big defaulter cum absconder being arrested in UAE and is part of the growing closeness and enduring relationship between the Emirates and India. Several other defaulters have been picked up in the Emirates and packed off to India. As have many terror suspects too.
On June 1, the ED had attached assets worth over Rs 4,700 crore of the Gujarat-based company under the Prevention of Money Laundering Act. A money laundering case was registered by the agency based on a CBI FIR against Sandesara group of companies, including Sterling Biotech.
The main accused in the case, Sandesara brothers, Nitin and Chetan Sandesara, allegedly defrauded a consortium of government banks. They fled the country before the CBI registered a case against them last year in August. The ED probe, according to senior officers, revealed that the Sandesara group of companies have allegedly cheated
several banks and the total outstanding amount against banks and investors may go beyond Rs 10,000 crore.
The ED had earlier arrested three persons, including Delhi-based businessman Gagan Dhawan, former director of Andhra Bank, Anup Garg, and Rajbhushan Dixit, director of Sterling Biotech.
Earlier, in a major crackdown, the ED had attached movable and immovable properties worth more than Rs 4,700 crore. The attached assets include immovable properties of about 4,000 acres, plant machinery, around 200 bank accounts of various companies and accounts of promoters, shares worth Rs 6.67 crore and various high-end luxury cars.
It is alleged that several companies promoted by Sandesara brothers had, on the basis of false and fabricated documents, fraudulently obtained credit facilities of about Rs 5,383 crore from various banks, which subsequently turned non-performing assets (NPA). The loans were sanctioned by a consortium of banks led by Andhra Bank and comprising UCO Bank, State Bank of India, Allahabad Bank and Bank of India.
Till date, the banks have declared as fraud the various outstanding loan accounts in respect of the Sterling Group, including Sterling Biotech, Sterling Port, PMT Machines, Sterling SEZ and Infrastructure and Sterling Oil Resources. The Sandesaras had allegedly floated more than 300 shell and benami companies in India and abroad to divert and misuse loan funds.
The modus operandi of money laundering involved the formation of shell/benami companies, manipulating balance sheets, inflating turnovers and insider shares trading.
These companies were controlled by the Sandesaras through dummy directors, who were or are employees of the various companies of the Sterling Group, it is alleged.
Bogus sale/purchases were shown between the benami companies and the Sterling group firms to divert loan funds and inflate turnovers to obtain further loans from banks. The funds so raised were rotated in multiple layers to conceal the source of such funds.
A major breakthrough in the case came when the ED successfully recovered truckloads of material connected to the formation and management of the shell and benami companies, such as original cheque books, rubber stamps, company seals, original property documents, original PAN cards, and more than 10 lakh pages of other incriminating documents, according to the ED.
The materials were seized from a room in Jogeshwari (East), Mumbai, where it was shifted from various premises and was being concealed to evade seizure. The ED has carried out more than 50 searches at various premises in multiple cities, including Delhi, Mumbai, Vadodara, Ahmedabad and Surat, in connection with the case.
The siphoned off loan funds were used to buy properties in the names of various companies, to purchase shares of Sterling Biotech and Sterling International Enterprises to attract “market fancy” and project a healthy picture of the companies.
Luxury vehicles were bought and a total of Rs 140 crore was withdrawn from bank accounts of various shell/benami companies. Some of these companies have been identified as Dipraj Trading, Embio Trading, Gatsby Trading, Newport Enterprise and Raj Bones.
“Some of the diverted loan funds were also paid to public servants. The ED is investigating this aspect of the case. It is also investigating various cross-border transactions undertaken by the group,” said an official.