ED arrests Shakti Bhog CMD in money laundering case
The Enforcement Directorate (ED) arrested Kewal Krishan Kumar, Chairman and Managing Director (CMD) of Delhi-based Shakti Bhog Foods Limited, in a money laundering case linked to an alleged multi-crore bank loan fraud. Kumar was arrested from Delhi on Sunday and later produced before a special Prevention of Money Laundering Act (PMLA) court that sent him to ED custody till July 9, said the agency.
Various incriminating documents and digital evidence have been recovered: ED
Prior to the arrest, the federal investigative agency also raided at least nine premises of the company in Delhi and Haryana. "During the searches, various incriminating documents and digital evidences have been recovered," the ED said.
Company is accused of alleged fraud of Rs. 3,269 crore
The ED case filed under criminal sections of the PMLA is based on a CBI FIR that was filed earlier this year against Shakti Bhog Foods Limited for an alleged fraud of Rs. 3,269 crore on a consortium of 10 banks led by the State Bank of India (SBI). The CBI complaint came after SBI registered a complaint against the company.
Here's what SBI said in its statement
"The 24-year-old company, which is into manufacturing and selling wheat, flour, rice, biscuits, cookies, etc., had grown organically as it ventured into food-related diversification over a decade with a turnover growth of Rs. 1,411 crore in 2008 to Rs. 6,000 crore in 2014," SBI said.
Company's account turned into NPA in 2015: SBI
The ED said, "Allegations against the accused include diversion of funds from loan accounts by round-tripping through related entities and siphoning of funds was being done by way of suspicious sale/purchase from various entities." The bank's report to the CBI said the turnover growth of the company came to an abrupt halt in 2015 with the account turning into a Non-Performing Asset (NPA).
Company under utilized capital expenditure in rice, paddy segments
The bank also said the company was ultimately declared a fraud in 2019. An investigation report by the bank on staff accountability in 2017 noted, "The account turned an NPA on account of inventory losses owing to a steep fall in paddy prices, under-utilization of capital expenditure in the rice and paddy segments and a delay in the tie-up funds to tide over losses."
Company showed Rs. 3,000cr-worth inventory got damaged in 2015-2016
A forensic audit done by the bankers pointed out that the company, in its account books of the financial year 2015-2016, showed that its inventory worth over Rs. 3,000 crore got damaged due to pests and was sold at substantially low prices.
Directors allegedly falsified accounts, forged documents: Bank
"This was contradictory to the stock and receivable audit report, which showed that the company had a stock of over Rs. 3,500 crore in September 2015, its warehouses were fully stocked and none of the inventory was obsolete or slow-moving," the bank had alleged in its complaint. According to SBI, the directors allegedly falsified accounts and forged documents to siphon off public funds.
Company made no claims about stock damage despite having insurance
The bank's report had further pointed out that the company, despite having an insurance policy for protection against fire, earthquake, and other perils had not made any claims about the stock getting damaged due to pests.