Bank fraud: ED attaches Vadodara firm's properties

The Directorate of Enforcement (ED), the Central agency probing Rs 2,654-crore bank fraud against promoters of Vadodara-based Diamond Power Infrastructure Limited (DPIL), on Tuesday attached immovable properties of the promoters worth Rs 1,122 crore.

ED is one of the three agencies, including CBI and I-T department, which have registered a case of money laundering against Suresh Bhatnagar, founder of DPIL, and his sons Amit Bhatnagar, Managing Director, and Sumit Bhatnagar, Joint Managing Director, as well as DPIL. Other than Central agencies, Anti-Corruption Bureau (ACB), Gandhinagar, too is probing the bank fraud.

ED also attached properties of related companies - Diamond Power Transformer, Diamond Projects, Mayfair Leisures and Northway Spaces. The properties attached by ED include plant, machinery, building and land of DPIL and DPTL in Vadodara, three windmills in Bhuj, residential properties of Bhatnagar family, unsold flats of Northway Spaces, under construction hotel of Mayfair Leisures and other land parcels held by related companies of DPIL.

In a statement, ED on Tuesday said that as per their investigations DPIL indulged in circuitous transactions of huge amounts with various parties, including its related companies, by issuing fake invoices without any actual sale/purchase of goods with “dual intention of availing CENVAT credit fraudulently as well as projecting increased turnover before the banks in their financial records.”

As per FIR filed by CBI, DPIL had fraudulently availed credit facilities from a consortium of 11 banks since 2008, leading to an outstanding debt of Rs 2,654.40 crore as of June 29, 2016. The company’s accounts were declared NPA by Bank of India and Bank of Baroda on February 16, 2016, while other banks declared it’s accounts as NPA from December, 2017.

Fictitious transactions

ED said that DPIL has shown fake/fictitious entries of receivables in their books of accounts of around Rs 1,000 crore from their debtors and on the basis of such books of account DPIL is continuing to get credit from the banks. The ED found most of the figures in its balance sheet to be exaggerated and funds gained fraudulently to the tune of Rs 261 crore by manipulating the facility of Letter of Credit (LC) from the banks.

ED found that the promoters, through their group companies, did little genuine business and most of the business shown on records was from fictitious transactions, resulting into default of Rs 2,654.40 crore to banks.

This, they said, promoters did through a web of companies and cross holdings. The ED stated that DPIL also diverted huge amount of funds received as loan/cash credit to its real estate companies.