The Serious Fraud Investigation Office (SFIO) has arrested former chief financial officer of Bhushan Steel Nitin Johri for fraudulent activities, including filing false documents with various banks, according to sources.
He was managing the affairs of Bhushan Steel and was looking after raising of funds from banks and financial institutions. He was also one of the signatories to the financial statements of the company till fiscal 2016-17.
The SFIO probe found that there were several fraudulent practices at the company, including manipulations in the accounts and financial statements during the term of Johri. These included maintaining inflated inventories for availing enhanced working capital, the sources said.
According to them, he was also one of the perpetrators of manipulations through the instrument of Letters of Credit (LCs), which was done by filing false documents with various banks.
A large number of LCs, amounting to more than Rs 20,000 crore, were opened using false documents on behalf of the company over a period of time starting from fiscal 2014-15, the sources noted.
By way of the said modus operandi, Bhushan Steel availed working capital to avoid getting their loan/credit accounts declared as non-performing assets by the banks. LCs worth more than Rs 3,000 crore finally devolved, they said.
Sources said that Johri was a member of the committee of board of directors on borrowing, investment and loans along with former promoters Brij Bhushan Singal and Neeraj Singal.
Johri, who was a whole time director of the company, was arrested by the agency on Thursday. He has been remanded to two-day custody of the SFIO, they added.