Bhushan Steel case: SFIO files complaint over misuse of corporate structure

The Serious Fraud Investigation Office (SFIO) Monday filed a 70,000-page complaint in the Bhushan Steel case wherein the probe agency has found "extreme misuse" of the corporate structure by the promoters which reduced corporate governance requirements to paper formalities, sources said.

Bhushan Steel had defaulted on loans and the banks had to take a haircut of more than Rs 20,000 crore as part of the resolution process.

The complaint has been filed at the special court, Dwarka, New Delhi.

Earlier, the agency had arrested company's former MD Neeraj Singal, who is now on interim bail.

The investigation has inter alia unearthed fraudulent misuse of letter of credits to the tune of around Rs 45,000 crore, gross misuse of the first-time adoption of Ind-AS in mis-stating the financial statements of the company, sources said.

There was fraudulent overvaluing of assets by around Rs 15,000 crore to inter alia write-off inventory worth around Rs 6,000 crore, trade receivables to the extent of Rs 1,250 crore, they added.

According to the sources, promoters used more than 150 companies to build a complex web of transactions to carry out the siphoning off funds to hoodwink the lenders and other investors in the company.

The investigation brought out the extreme misuse of the corporate form by the promoters who ran the listed company more like a proprietorship concern reducing corporate governance requirements to paper formalities, they added.

Sources also said the role of statutory auditors has again come in focus with their conniving role glaringly coming out. The agency has also raised questions on the role of bank officials in perpetuating the fraudulent activities, they added.