The Serious Fraud Investigation Office (SFIO) has arrested Bhushan Steel’s former promoter Neeraj Singal after an investigation was conducted on the company and the promoter. The SFIO arrested him for siphoning off funds over Rs 20 billion from loans availed by Bhushan Steel, using 80 companies.
The investigative body observed that these companies
had been used by Singal for fraudulent activities through “bogus loans and advances, investments”. The SFIO was given the authority to make arrests, last year. The SFIO has used the power for the first time since getting it. The investigation is still in progress.
Singal will be in judicial custody till August 14. The SFIO has observed that these practices ultimately led to the company going into insolvency. Bhushan Steel has now been acquired.
The company was one of the 12 big-ticket cases that went to the National Company Law Tribunal (NCLT) after the RBI identified it as a bad loan.
Neeraj Singal lost control of the company after Section 29A was inserted in the Insolvency Act, stating that parties related to the company undergoing resolution cannot submit a resolution plan. The company owed more than Rs 440 billion to its lenders. Bhushan Steel has a 5.6 million tonne steelmaking capacity.
Earlier this year, chairman of Bhushan Steel, Brij Bhushan Singal, was also called for questioning by the SFIO. This is not the first time Singal has been arrested on grounds of fraud. Back in 2014, he was arrested by the Central Bureau of Investigation in the Syndicate Bank bribery case.
Apart from Bhushan Steel, eight other major cases are being investigated by the SFIO — Ruchi Soya, Kanishk Gold, Sterling Investment Corporation Case, Rotomac, Fortis-Religare, ICICI Bank-Nupower and the PNB fraud.