The Enforcement Directorate (ED) on Wednesday provisionally attached assets worth Rs 9,778 crore in connection with a money laundering probe against Gujarat-based Sterling Biotech and their fugitive promoters Sandesara brothers’ involvement in a multi-crore bank fraud.
This attachment, one of the biggest seizures in the recent times, is in addition to the assets of worth Rs 4,730 crore, which were seized by the enforcement agency last year.
The attached properties included four oil rigs and oil field namely OML 143, located in Nigeria, held by Sterling Energy Exploration (SEEPCO), Nigeria. The probe agency also seized ships namely — Tulja, Bhawani, Varinda, Bhavya, Brahmani and others. These ships were registered in Panama and owned by Atlantic Blue Water Services, a company controlled by Sterling Biotech. Further, Aircraft 200 Gulfstream registered in the US, which is held by SAIB LLC was also seized along with a residential flat in London.
The ED and the Central Bureau of Investigation (CBI) had registered case in 2017 for cheating and bank fraud to the tune of Rs 5,383 crore against the Sterling Biotech and its promoters, including Nitin Jayantilal Sandesara, Chetankumar Jayantila Sandesara, Deepti Sandesara and others.
According to the ED, the Sterling Biotech had obtained both Indian and foreign currency loans from Indian banks, sanctioned by a consortium comprising Andhra Bank, UCO Bank, State Bank of India, Allahabad Bank and Bank of India.
It was revealed during the investigation that the bank loan funds were diverted for non-mandated purposes and also “layered and laundered” through a web of multiple domestic as well as offshore entities. The main promoters have not only siphoned off loan funds to finance their Nigerian oil business but also for their personal purposes, ED noted.
The probe also revealed the company was engaged in round-tripping of standby letters of credit (SBLCs) funds to the tune of Rs 4,500 crore, in violation of the Reserve Bank of India’s rules for sanctioning loan.
Later, SBLCs were devolved on the guarantor banks causing wrongful loss to the public sector banks and the public at large, ED said.
The promoters allegedly adopted various strategies such as incorporating multiple shell companies, conducting circular transactions to artificially inflate turnover of the flagship firms, claiming higher depreciation on non-existing machinery to avoid tax liabilities, artificial share trading with the shell firms, layering and laundering of the proceeds of crime within India and abroad.
According to the probe agency, the promoters used their employees’ names and incorporated 249 domestic and 96 offshore shell companies.
During the probe, the ED seized the original PAN cards stamps, Memorandum of Association and signed blank cheque books of shell companies which were with promoters.
The ED found that promoters have created a web of corporate and accounting structure abroad. They have formed at least 96 entities in countries including the UAE, the US, the UK, British Virgin Island, Mauritius, Barbados, Panama, and Nigeria.
The main entities outside India include Richmond Overseas, Sunshine Trust Corporation, SEEPCO BVI, SEEPCO Nigeria, Atlantic Blue Water Services, and others. “It is revealed that funds were rotated through various structures and ultimately parked in Nigeria to cater personal interests of the main promoter,” the ED said.
The Sterling group owes over Rs 15,600 crore to its financial and operational creditors, while the flagship Sterling Biotech owes over Rs 7,500 crore.