IMA Ponzi scheme case: A multi-crore scheme run by Karnataka-based I-Monetary Advisory (IMA) and its group entities allegedly duped lakhs of people by promising higher returns using Islamic ways of investment. The Central Bureau of Investigation (CBI) is currently investigating the case and has filed at least three FIRs. (File image of the CBI headquarters)
The Enforcement Directorate (ED) filed its charge sheet under the Prevention of Money Laundering Act against Gujarat-based Sterling Biotech on October 24, naming 195 persons and entities. The move to act against Sterling Biotech comes in the backdrop of the internecine battle for power at the Central Bureau of Investigation (CBI), a constitutional body mandated to act independently despite being staffed by government appointees.
The government could find itself hemmed in as the spat between CBI Director Alok Verma and Deputy Director Rakesh Asthana unravels, affecting both the credibility of the organisation, and the government’s reputation as a neutral facilitator in the working of constitutional bodies.
On October 21, the CBI named Asthana as an accused in the Sterling Biotech case, an unprecedented event in the history of the institution. The CBI said that Asthana is being investigated for wrongdoing in six other cases as well.
Asthana, a 1984-batch Gujarat cadre IPS officer, has worked on several high-profile cases including the Godhra train carnage, that precipitated one of the worst communal riots in India and the 2008 Ahmedabad bomb blast.
Asthana has handled politically-charged cases like the coal scam and the acquisition of AgustaWestland helicopters by the UPA government. He was appointed special director in October 2017 despite being named in an FIR in August 2017 that accused him of accepting bribes of Rs 3.8 crore from Sterling Biotech.
Following preliminary investigations, the ED claimed that the Sandesara family -- promoters of Sterling Biotech -- had established a web of 174 shell companies. The ED report suggested that certain "public officials" were being probed for allegedly accepting bribes out of the Rs 8,100 crore apparently bilked by Sterling Biotech.
"Cash to the tune of Rs 140 crore was withdrawn from shell companies and used for personal purposes of the promoters which includes bribing of public officials. The investigation in this aspect is under process," the ED report said.
The case relates to a criminal conspiracy allegedly hatched by brothers Chetan Sandesara and Nitin Sandesara to defraud banks by leveraging the influence of high-ranking public officials to access easy credit from lenders. They are believed to have fudged financial records of Sterling Biotech to raise capital from banks that were disproportionate to the size and financial health of their flagship company.
After the loan was authorised, it was diverted through multiple shell companies and not utilised for the purposes listed in the terms of the transaction. Sterling Biotech defrauded banks to the tune of Rs 8,100 crore. The money sanctioned to the company was raised from both domestic and overseas branches of Indian banks.
Domestic loans amount to Rs 3,675 crore of the quantum while Rs 4,425 crore was raised from foreign branches. The consortium of lenders was led by Andhra Bank. Moreover, the company managed to raise $80 million (Rs 590 crore) from abroad despite being declared 'wilful defaulter' by Reserve Bank of India (RBI) in 2012.
An ED official told the Indian Express that the Sandesara family appointed "servants and employees" as directors of shell companies, while retaining direct control only in a handful of such entities. The money sourced from Indian banks was routed through these dubious companies and eventually used for creating capital-intensive assets in foreign countries.
The prime accused include Chetan Sandesara, Nitin Sandesara, Dipti Sandesara, Hitesh Patel, Rajbhushan Dizit, and the family's chartered accountant Hemant Hathi. The ED went on to say that action will be initiated against the Sandesara brothers under the Fugitive Economic Offenders Law. A red corner notice has been issued against the promoters.
Investigative agencies believe that the Sandesara family are currently based in Nigeria, where they have invested in oil rigs and refineries. Banks are trying to reach a settlement with them as recovering the money could prove to be a long drawn affair in the absence of an extradition treaty with Nigeria.
The agency has attached properties worth Rs 4,700 crore of the defaulters and is looking to seize more fixed assets belonging to the debtors, so that the haircut to banks is minimised. Former Director of Andhra Bank, Anup Garg, has been booked for allegedly colluding with the Sandesaras and helping them secure a loan against inflated collateral.
Although a white collar crime, the political overtones in this case are manifold. The fact that Rakesh Asthana, a senior official of the CBI, is being probed undermines the integrity of the investigation agency. Moreover, the controversy surrounding his appointment raises the question of whether the government exercises political discretion in selecting candidates who are pliant to their agenda. Asthana was appointed as second in command of CBI despite being charged with corruption in multiple cases.
Both Rakesh Asthana and Alok Verma have been sent on leave, with Nageshwar Rao being appointed as interim director. The government has further disbanded the team that is presently investigating the charges of corruption against Asthana. It has brought in new faces and shunted out officers who were working on the case. The team will now be led by Satish Dagar, and supervised by Tarun Gauba.
Dagar previously investigated cases against Dera Sachcha Sauda chief Gurmeet Ram Rahim, while Gauba was a part of the team that probed discrepancies in the Vyapam case.NDTV
reported that the previous investigating officer, Deputy SP AK Bassi, has been transferred to Port Blair in "public interest", with "immediate effect". The Sandesaras remain at large.