The Enforcement Directorate has arrested three persons, including a former Member of Parliament, in connection with a massive bank fraud case.
The probe agency's Kolkata Zonal Office arrested Kuldeep Rai Sharma, Ex-Member of Parliament, Andaman and Nicobar Islands and former Chairman of Andaman and Nicobar State Cooperative Bank (ANSCBL); K Murugan, Managing Director of ANSCBL; and K Kalaivanan, Loan Officer of ANSCBL.
The arrests were made on September 17 under the provisions of the Prevention of Money Laundering Act (PMLA), 2002. A special court under PMLA has remanded Kuldeep Rai Sharma and Kalaivanan to eight days of ED custody. These are the first ever arrests by ED in the Union Territory of Andaman and Nicobar Islands.
The ED investigation stems from an FIR filed by the Crime and Economic Offences Cell of the Andaman and Nicobar Police against several private persons and ANSCBL officials.
According to ED, bank officials, led by Mr Sharma, allegedly floated over 100 shell companies and sanctioned loans in gross violation of banking norms. The loans, amounting to more than Rs 500 crore, were allegedly diverted for personal gains. Investigators say that around Rs 230 crore was siphoned off for the exclusive benefit of Mr Sharma and his close associates.
Evidence suggests that Mr Murugan and Mr Kalaivanan also fraudulently availed loans in the names of relatives and facilitated loans for associates in return for 5 per cent commission, often collected in cash or routed through shell firms.
Earlier, the agency had conducted searches at 21 locations on July 31 and August 1, targeting shell companies linked to Mr Sharma and his accomplices. Fresh searches are underway at three premises in the Andaman and Nicobar Islands to trace further diversion of funds.
The ED suspects that large sums were withdrawn in cash.
