CBI books Delhi company in ₹1,800-crore bank fraud case

A forensic audit carried out by Ernst and Young revealed massive diversion and siphoning off of bank funds, fictitious transactions, forgery etc.

The Central Bureau of Investigation on Friday raided three locations, three days after booking a petrochemical trading company - Jay Polychem India Ltd - for allegedly cheating a consortium of 13 banks led by State Bank of India of ₹1,800 crore, people familiar with the development said.

The agency has issued lookout circulars (LOC) against the owners of the company - Satinder Pal Madhok, Sandeep Madhok, Harneet Kaur and Sumohita Kaur so that they don’t flee the country, they said.

It is alleged in an FIR, registered on December 1, that Jay Polychem India, having its office in south Delhi’s Lajpat Nagar, engaged in wholesale import and trading of industrial chemicals, petrochemical products and agro commodities, took total loans of ₹1,652 crore from 13 banks led by SBI before 2014 but failed to repay the same.

The account was declared a non performing asset (NPA) in August 2014 due to non-payment of dues.

A forensic audit carried out by Ernst and Young revealed massive diversion and siphoning off of bank funds, fictitious transactions, forgery etc.

The CBI FIR, reviewed by HT, states that some of the companies associated with Jay Polychem did not exist at their registered addresses while there were common addresses between the vendors and customers.

The accused company, CBI says, had issued Letters of Credit (LCs) to various companies abroad which didn’t exist. The income tax return documents of the company indicated that trade receivables amounting to ₹679 crore were classified as doubtful debtors. It is suspected that receivables shown by the company may be fictitious.

As of March 2018, the company owed ₹1800.72 crore to 13 banks with SBI having maximum exposure of ₹474.72 crore.

Other banks which have been cheated by the company include – Bank of Baroda, Allahabad Bank, Canara Bank, Central Bank of India, Corporation Bank, Union Bank of India, Syndicate Bank, Bank of India and others.

The company representatives could not be located by HT for their comments.