Here's how govt. agencies cracked Diamond Power Infra fraud

A couple of days ago, the nation woke up to the news of the Central Bureau of Investigation (CBI) conducting raids against a Vadodara firm for a Rs. 2,654 crore default.

Diamond Power Infrastructure Ltd. and its directors-- including Managing Director Amit Bhatnagar, and Joint Managing Director Sumit Bhatnagar-- were booked by the Central Bureau of Investigation (CBI).

It is interesting to note that the entire government acted in unison and in a proactive manner on this case, which is quite exemplary.

Based on a grievance letter, the Prime Minister's Office (PMO) directed the Ministry of Finance, CBI, and Enforcement Directorate (ED) on March 6, to ascertain the facts in the case for prompt action.

The agencies probed the matter and the results of the investigation were promptly shared with various divisions of the Finance Ministry.

Department of Financial Services, Central Board of Direct Taxes (CBDT), Ministry of Corporate Affairs, CBI, and ED, worked as a joint team to ensure an optimal outcome.

The Finance Ministry also directed the banks for full details and filing of the First Information Report (FIR).

Thus, the Bank Of India filed a complaint to the CBI, within a week after the PMO first sent a letter on this case.

The government wrote another letter on March 20 to ensure that full information is shared amongst the investigative agencies.

A fortnight after this, the CBI raided Diamond Power Infrastructure Ltd. and booked its directors.

It is alleged that Diamond Power Infrastructure Ltd., through its management, fraudulently availed Central Value Added Tax Credit of Rs. 100.80 crores until 2013.

The company and its directors managed to get the term loans and credit facilities, in spite of the fact that they were already appearing on the defaulters list of the Reserve Bank of India (RBI) and Export Credit Guarantee Corporation (ECGC) caution list at the time of initial sanction of credit limits by a consortium of 11 banks (public and private).

At the time of the formation of the Consortium in 2008, Axis Bank was the lead bank for the term loan and Bank of India was the lead bank for CC Limits.