The Enforcement Directorate on Friday arrested former Bhushan Power and Steel Ltd CMD Sanjay Singal in connection with its probe in a multi-crore money laundering case linked to an alleged bank loan fraud.
According to Enforcement Directorate officials, Sanjay Singal was arrested under the Prevention of Money Laundering Act (PMLA) after he was questioned for several hours in the evening in connection with the case.
Sanjay Singal was placed under arrest as he was not cooperating in the probe and will be produced before a local court on Saturday to seek further custody, an Enforcement Directorate official said.
The Enforcement Directorate recently attached assets worth Rs 4,025 crore of Bhushan Power and Steel Limited (BPSL) in this case.
"An amount of Rs 695.14 crore was introduced as capital by Sanjay Singal, the then CMD of the company, and his family members in BPSL out of artificially generated long-term capital gains (LTCG) by diversion of bank loans fund of BPSL," the Enforcement Directorate had said.
LTCG was exempted from income tax during the relevant time, the agency said.
The Enforcement Directorate's case of money laundering was filed after studying the FIR registered by the Central Bureau of investigation (CBI) against the company, Sanjay Singal and others on charges of corruption.
The CBI's FIR had alleged that BPSL, through its directors/staff, fraudulently diverted about Rs 2,348 crore from the loan account of Punjab National Bank (Delhi and Chandigarh), Oriental Bank of Commerce (Kolkata), IDBI Bank (Kolkata) and UCO Bank (Kolkata) into the accounts of various companies or shell companies without any obvious purpose and thereby misused the funds.
The Enforcement Directorate said that BPSL had also made RTGS payments to various entities against "fictitious purchases" of capital goods.
Against the RTGS payments, these entities had transferred cash to BPSL which was ultimately traced to have been used for generation of artificial LTCG by jacking up the prices of penny stocks by way of synchronised trading, the Enforcement Directorate had said.
Another amount of Rs 3,330 crore invested as equity (share capital and premium) by promoter companies was also found to have been routed out of the funds obtained as various loans and diverted from accounts of BPSL in the shape of advances shown to various shell companies by the different entry operators, the agency had alleged.
The proceeds of crime in this case, the agency said, were laundered by way of introduction into the books of accounts as equity for window dressing the debt equity ratio.