CBI searches 3 locations in Delhi in alleged Rs 1,800-crore State Bank of India fraud case

A forensic audit by Ernst and Young showed alleged diversion and syphoning off of bank funds, fictitious transactions, forgery etc resulting in the FIR, they said

The CBI on Friday carried out searches at three locations here after booking Jay Polychem (India) Ltd in an alleged Rs 1,800-crore bank fraud in a consortium led by State Bank of India, officials said.

The agency has received a complaint from the SBI against the Lajpat Nagar-based ISO-certified company and its promoters and directors for causing a loss of Rs 1,800.72 crore to a 13-bank consortium led by it, they said.

The CBI has booked the company, its managing director Satinder Singh Dhingra, director Sandeep Singh Madhok, another company, Jaspark Speciality Chemicals Ltd, and unidentified others.

Look-out circulars have been opened against Satinder Pal Madhok, Sandeep Madhok, Prakash Kaur, Harneet Kaur and Sumohita Kaur, the bank said in its complaint, which is now part of the FIR.

The company is engaged in import and trade of industrial chemicals and its account was not satisfactory, the bank alleged.

It said the company forayed into different businesses, including oil exploration.

The bank alleged that the account had minimal transactions and was running irregularly since May 2014 due to continuous instances of Letters of Credit (LCs) devolvement of all banks in the account.

It turned non-performing asset in August 2014 due to sustained irregularity for over 90 days, it said.

A forensic audit by Ernst and Young showed alleged diversion and syphoning off of bank funds, fictitious transactions, forgery etc, resulting in the FIR, the officials said.

It showed that the company indulged in business dealings with companies appearing to be potentially suspicious, the bank alleged, adding that LCs worth Rs 453.59 crore were issued to these companies.

The bank also alleged that financial statements of the company showed that the Capital Work in Progress (CWIP) increased to over Rs 408 crore in 2015 towards exploration and assessment of oil block under NELP VIII.

The data from the Directorate General of Hydrocarbons showed the cost incurred by the company for two oil wells to be around Rs 15.35 crore. The bank alleged that Rs 392 crore were diverted by the company.

"Searches are being conducted today at three locations in Delhi at the office and residential premises of borrower company and other accused," CBI spokesperson R K Gaur said.