The Enforcement Directorate (ED), under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, today attached several movable and immovable properties of Sterling Biotech Group to the tune of Rs. 4701 crore in connection with a money laundering investigation of Rs 5,000 crore in a bank fraud case registered by the CBI including Sterling Biotech’s promoters Nitin Sandesara and Chetan Sandesara.
The ED had registered a case of money laundering against the company, its promoters and others in October 2017.
The attached assets include immovable properties of around 4,000 acres in total, plant machinery, around 200 bank accounts of various companies and accounts of promoters, shares worth Rs. 6.67 crores and various high-end luxury cars.
Several companies promoted by the Sandesara brothers had, on the basis of false and fabricated documents, fraudulently obtained credit facilities of more than Rs 5000 crores from various banks, which subsequently turned into NPAs. The loans were sanctioned by consortium of banks led by Andhra Bank, UCO Bank, State Bank of India, Allahabad Bank and Bank of India.
Till date, the banks have declared as fraud, various outstanding loan accounts to the tune of about Rs 5000 crores in respect of various companies of Sterling Group, including Sterling Biotech Ltd., Sterling Port Ltd., PMT Machines Ltd., Sterling SEZ and Infrastructure Ltd and Sterling Oil Resources Ltd.
During the course of the ongoing money laundering investigations, Non-Bailable Warrants were issued by the Special PMLA Court, New Delhi, against several persons, including the promoters of Sterling Biotech Ltd, Nitin Sandesara and Chetan Sandesara. The Sandesaras had set up more than 300 shell and benami companies in India and abroad, which were used to divert and misutilize loan funds.
The modus operandi of money laundering involved formation of shell/benami companies, manipulating balance sheets, inflating turnovers, insider shares trading, etc. These shell and benami companies were controlled by the Sandesaras through dummy directors, who were/are employees of the various companies of Sterling Group. Bogus sale/purchase was shown between the benami companies and the Sterling group of companies in order to divert loan funds and inflate turnovers to obtain further loans from banks.
Bogus sale/purchase was also shown between the benami companies and the Sterling group of companies in order to divert loan funds and inflate turnovers to obtain further loans from banks. The loan funds were rotated in multiple layers through the various shell and benami companies to conceal the source of such funds.
A major breakthrough in the case came when the ED was successful in recovering truckloads of material connected to the formation and management of the various shell and benami companies, such as original chequebooks, rubber stamps, company seals, original property documents, original PAN cards, and more than 10 lakh pages of other incriminating documents. This material was recovered from a room in Jogeshwari (East), Mumbai, where it was shifted from various premises and was being concealed to evade seizure.
In total, the ED has carried out more than 50 searches at various premises in multiple cities including Delhi/NCR, Mumbai, Vadodara, Ahmedabad and Surat, in connection with the ongoing investigations.
The siphoned off loan funds were used to buy properties in the names of various companies, to purchase shares of Sterling Biotech Ltd and Sterling International Enterprises Ltd to attract market fancy and project a healthy picture of the companies, to purchase many luxury cars including Porsche, Range Rover, Audi, Mercedes, BMW etc, to withdraw cash of about Rs 140 Crores from bank accounts of various shell/benami companies( such as Dipraj trading Ltd., Embio Trading Ltd., Gatsby Trading Ltd., Newport Enterprise Ltd., Raj Bones Ltd.), which was used for various personal purposes such as purchase of jewellery. Some of the diverted loan funds were also paid to public servants. The ED is also investigating this aspect of the case.
The ED is also investigating various cross-border transactions undertaken by group. The Sandesaras are into oil business and own several rigs, barges and oilfields across Nigeria. Apart from this, they have several business concerns in Mauritius, UAE, British Virgin Islands, Seychelles and USA, among other countries. More than 50 foreign bank accounts and several other assets and properties situated abroad, related to the Sterling Group, are also under the scanner of the ED.
In this case, the ED has arrested 3 persons so far, including Delhi based Businessman Gagan Dhawan, Anup Garg Ex-Director of Andhra Bank (Chartered Accountant) and Rajbhushan Dixit, Director of Sterling Biotech Ltd. The ED has also filed multiple prosecution complaints before the Special PMLA Court in this case.