The directors of a steel trading firm, who were already accused of fraud and booked by the Central Bureau of Investigation, allegedly indulged in the same modus operandi again, to defraud the State Bank of India to the tune of ₹391.30 crore.
In a complaint lodged with the CBI’s Economic Offences Branch in Chennai, the SBI’s Stressed Assets Management Branch (SAMB) accused M/s P.S. Krishnamurthy Steels Pvt Ltd of Chennai and its Directors P.S. Krishnamurthy and P.K. Vadivambal of defrauding the bank after taking a loan and forging documents to divert the funds.
The bank said the account of an associate company of the accused persons, M/s Thangam Steels Ltd, was declared a fraud and a case registered against them by the CBI last year. “The directors in both the companies are one and the same and the modus operandi is similar,” Deputy General Manager, SAMB, Ravichandran said in his complaint.
The allegation is that the firm, which is engaged in the trading of iron and steel, was sanctioned fund-based and non-fund based limits of ₹240 crore under a consortium by State Bank of India and State Bank of Mysore. The account was irregular from 30/11/2012 due to non-servicing of interest and devolvement of Letters of Credit. A few months later, the account turned into a non-performing asset with an outstanding due of ₹222.98 crore.
The bank claimed that the fraud took place at the SBI Overseas Branch, from where the accused persons “illegally diverted the funds, manipulated books of accounts with an objective to defraud the bank and to gain unlawfully at the cost of bank’s funds.”
It came to light in a forensic audit ordered by the bank that the company and its directors cheated the bank to the tune of ₹391.30 crore of public money by resorting to activities that constituted punishable offences.
Though the role of public servants was not detected, the bank requested the CBI to examine the involvement of unknown persons/public servants during the investigation. However, the bank said lapses were found in respect of follow up of advance, taking cognisance of early warning signals and the concerned officials were called for submission of explanations.
Besides the accused company and its directors, the CBI also booked unknown persons and public servants in the case on charges of criminal conspiracy, cheating, forgery and falsification of accounts. The agency also invoked provisions under the Prevention of Corruption Act, 1988, with regard to criminal misconduct by a public servant.
