Fraud: CID chargesheets staff of PSU banks, pvt firm

The Criminal Investigation Department (CID) has filed a charge sheet against two employees of a leading metal exporting company for misappropriation of funds, amounting to Rs 78 crore, in collusion with five bank officials.

When the owner and managing director of Metal Closures Pvt Ltd got to know of the misappropriation, the accused also took possession of the company, misusing the provisions under the Sarfaesi Act, the charge sheet stated.

The charge sheet named Mahesh Hegde, CFO (chief financial officer), as the prime accused and Yogesh Ural K, general manager (commercial), Bengaluru unit, Metal Closures, along with bank officials S Bhaskaran, deputy general manager, Mid Corporate Branch SBI; Rao Saheb Honakatti, chief manager and authorised officer (Sarfaesi); Avinash Katavare, chief manager from Punjab National Bank (PNB); D Vasudevan, deputy general manager, PNB; and V V Krishnamurthy, a chartered accountant appointed as concurrent auditor by SBI for Metal Closures.

Based on an FIR registered at the Subramanyapura police station, the case was transferred to the CID for investigation. The sleuths claimed to have found evidence to establish misappropriation of funds, illegal possession of the company and also efforts to close down its operations to conceal the fraud.

Metal Closures managing director Prashanth Hegde, the complainant, discovered that Mahesh fraudulently operated the company's bank accounts by forging the managing director's signature and issuing RTGS payments based on photocopied and faxed cheques. He also found out that the misappropriated funds amounted to Rs 68 crore and brought this to the notice of the deputy general manager of SBI S Bhaskaran, who led the consortium of banks (SBI, PNB, Corporation Bank and UCO Bank) that financed the company's operations.

Prashanth also urged the consortium to reject any loan enhancement requests from the CFO.

"Meanwhile, the consortium went ahead and sent notices to the company, stating it would take possession soon for showing non-performing assets (NPA). But by then, SBI had already appointed a concurrent auditor and a security agency from the bank's side, expelling the existing company's security guards," said K Nanjunde Gowda, DySP, CID.

After the first notice under Section 13(2) of the Sarfaesi Act is served, the company should be given 60 days to respond. The second notice under Section 13(4) must be issued before the possession, which should also be done before a mahajar or inventory. But in this case, the consortium of banks took possession of the company well before the notices were served, which establishes the malafide intent, the charge sheet stated.

After the consortium realised that their possession was illegal, they withdrew the earlier two notices and served two fresh ones. However, the company account's NPA date on the earlier two notices was May 28, 2014, while the re-issued notices stated the company account's NPA was since January 31, 2010.

The charge sheet also stated that there were thefts in the company during the period of the bank's possession. There were instances of the accused selling expensive equipment to its competitors at a throwaway price, which did not come into the company's account. The accused also instigated and allowed the LPG installation belonging to the company to be removed, which is the company’s lifeline, and the intent was to close down its operations, the charge sheet stated.

Second case The CID is also investigating another case of misappropriation of funds, involving UCO Bank employees in collusion with employees of Metal Closures. This case is based on an FIR registered at the Ashok Nagar police station in 2015 by Metal Closures managing director Prashanth Hegde and chief financial officer Mahesh Hegde and staff of UCO Bank. The CID is yet to file the final report in this case.