Saradha scam: SFIO stumbles on bank scam, Indian Bank, SBI figure among Consortium of lenders

Investigations carried out by the Serious Fraud Investigation Office (SFIO) into the Saradha group fraud have thrown up a major bank scam involving public sector Indian Bank as the leader of a consortium that extended loans in excess of Rs 171 crore to a shell company.

Global Automobiles Ltd (GAL), a firm purportedly engaged in the manufacture of motorcycles and scooters, was acquired by the Saradha group.

"It appears that the bank officials, including Malay Mukherjee, the then GM of Indian Bank, were in connivance with GAL and its erstwhile directors, including Santanu Ghosh, Samiran Das and Indrajit Chandra, and are prima-facie liable for punishment under Section 420 read with Section 120B of the IPC," the SFIO report states. The two sections deal with cheating and criminal conspiracy.

State Bank of India (SBI) also figures among the consortium of lenders.

The SFIO report further recommends that "a reference may be made to the CBI and the Reserve Bank of India to investigate the grant of loans to GAL against non-existent/highly inflated value of assets and the role of bank officials thereof".

The report has also recommended referring the matter to the Enforcement Directorate. The SFIO team had calculated the net worth of GAL at a paltry Rs 0.41 crore, based on the figures provided in its balance sheet in 2010. However, despite the very low net worth, the Saradha group signed an agreement to purchase 100 per cent equity shares of GAL from Ghosh for Rs 20 crore on October 30, 2010.

Investigations have revealed that GAL had shown stocks to the tune of Rs 125.49 crore to get the loan but the actual value of these stocks, which included 80-odd motorcycles and some spare parts such as mudguards, could at most be valued at Rs 13.31 crore.

Various inspection teams from the banks in question had recorded on May 12, 2011, that although the company was supposed to be engaged in the manufacture of motorcycles and scooters "during the course of our inspection, no production activity was taking place".

A second inspection report dated October 29, 2011, reiterated the observation.

"However, the minutes of a meeting of consortium lenders held on August 12, 2011, reveal that Indian Bank GM Malay Mukherjee, who also headed the Kolkata zonal office, had undertaken a sudden visit to the factory premises of GAL on August 5, 2011, and observed that 'manufacturing activities were going on and there were about 300 completed bikes'," the SFIO report points out.

Interestingly, Sudipta admitted to the SFIO team that the accounts of GAL were falsely prepared by Ghosh and Sudeshna Ghosh with their statutory auditors and this stock was shown in the balance sheet to take working capital loans from banks.

However, no physical purchase was made by the two and the same was written off later through profit and loss accounts.

Sudipta also disclosed that he had already brought this fact to the notice of Excise Department officials when they came for verification.

While being interrogated, he further stated that he had tried to get the GAL stocks physically verified but Ghosh did not allow it.

Another Saradha group official told the SFIO team that when he undertook a physical verification of the stocks at a later date the inventory with GAL could be valued at a mere Rs 1 crore.