The Anti-Corruption Bureau on Saturday filed a First Information Report in the Jammu and Kashmir Bank loan fraud case involving over Rs. 1,100 crore, officials said.
The said amount was advanced by the bank to Rice Exports India (REI) Agro Ltd. Soon after the FIR, different teams carried out extensive searches at the houses of over a dozen accused bank officials, including its former chairman Mushtaq Ahmad Sheikh, at nine locations in Kashmir, four in Jammu and three in Delhi, an ACB spokesperson said in a statement here.
He said the houses of REI Agro’s chairman Sanjay Jhunjhunwala and vice president and managing director Sandeep Jhunjhunwala were also searched in Delhi.
Further investigation into the matter was underway and three teams were continuing with the searches in Delhi, the spokesperson added.
The ACB registered a Preliminary Enquiry (PE) on allegations that the officials of the bank’s branches at Mumbai’s Mahim and Delhi”s Ansal Plaza had sanctioned loans to the tune of Rs. 800 crore in favour of REI Agro on the basis of fake documents and in violation of the laid-down banking procedure between 2011 and 2013, which resulted in the accounts becoming non-performing assets (NPAs) in 2014, thereby causing a huge financial loss to the bank.
It emerged during the PE that REI Agro, which had shown its head office in Kolkata and corporate office in New Delhi, approached the Mahim branch of the bank, even though it did not have an office in Mumbai, and got loans or advances worth Rs. 550 crore sanctioned in its favour, the spokesperson said, adding that the Vasant Vihar branch of the bank in New Delhi also sanctioned Rs. 139 crore in the firm’s favour against the supplier bill discounting facility and takeovers.
He said the company approached the Mahim and Vasant Vihar branches of the bank for sanctioning of the advances to make payments to farmers, in accordance with the terms and conditions laid down in the loan sanction order of the bank.
“The farmers were supposed to provide paddy to the company and in turn, the company had to sell the produce and the remittance thereof had to be deposited in the bank as installments against the advances received by the company.”
“Despite the fact that it was known to the bank authorities and the company that the loan amount had to be disbursed among farmers for production of paddy, the company brazenly violated the rules in connivance with bank officials, who allowed disbursement of the loan through joint liability groups (JLGs), though the company had already received the paddy and was not entitled to disburse the loan under such circumstances,” the spokesperson said.
According to the probe conducted during the PE, the JLGs were found to be non-existing entities, the credentials and antecedents of which were never verified by the bank, he added.
“The objective was to facilitate the company to divert the loan amount for its own benefits. The bank also violated NABARD guidelines, according to which members of JLGs (groups of farmers) should be from the same area or village, but this aspect was deliberately and with mala fide intentions ignored by the bank officers,” the spokesperson said.
The crop loan was, in fact, recommended against the securities of hypothecation of receivables of farmers or JLGs for supply of paddy to REI Agro and a corporate guarantee of the company, along with post-dated cheques (PDCs), which could not be construed as a tangible security, he added.
Further, the bank officers had also failed to take cognisance of the disbursement requests by the company, where it was mentioned that it had already received the produce from the farmers or JLGs, thus making the loan unwarranted, he said.
On a scrutiny of the bank’s records, nothing was found as to who had drafted the loan documents and there was not even any vetting certificate of its law department, the spokesperson added.
These loans or advances were sanctioned and disbursed by the officers and officials of the bank’s Mahim, Mumbai and Vasant Vihar, New Delhi branches, in connivance with and under the patronage of the then chairman of the bank, Mushtaq Ahmad Sheikh, as part of a single conspiracy spread over several years, he said.
The ACB spokesperson added that huge monetary benefits were conferred upon the company dishonestly and fraudulently, which resultantly inflicted huge loss of Rs. 635 crores plus Rs. 489.45 crores (Interest component), totaling Rs. 1124.45 crores to the J&K Bank which ultimately is loss to the State exchequer.
The omissions and commissions which have surfaced during PE clearly disclosed commission of offences under section 5 (1) (d) r/w 5 (2) J&K PC Act Svt. 2006 & Sec. 467, 468, 471 & 120-B RPC on the part of the bank officers/officials namely Mushtaq Ahmad Sheikh, then Chairman J&K Bank, Imtiaz Ahmed Bhat then Branch Head Vasant Vihar, DalipBhan Credit Officer, Branch Vasant Vihar, Ashok Kumar Credit Officer, Branch Vasant Vihar, Harsh Kumar Manager Advances, Branch Vasant Vihar, Rakesh Kaw Manager Advances, Branch Vasant Vihar, Adil Bashir then Branch Head Mahim Mumbai, S.S.Sambyal, Credit officer, Branch Mahim, Mohd. Yousaf then Branch Head Mahim, Abdul Hamid Thokar Credit officer, Branch Mahim, Basir Ahmad then Branch Head Mahim, Nisar Ahmed Shah Credit officer, Branch Mahim, Shafiq Ahmed Credit officer, at A&AP (Advances & Asset Planning) Corporate Headquarters, J&K Bank, Srinagar, A K Koul Retd. Vice President Branch Head Vasant Vihar and the beneficiaries (as conspirators) namely Sanjay Jhunjhunwala, Chairman of Company M/s REI Agro Ltd. Sandeep Jhunjhunwala, Vice President and Managing Director of the Company, Danish Beig, Vice President Corporate Finance REI Agro, Rahul Singhania, Manager Corporate Finance M/s REI Agro, JLGs and others, said the spokesman.
Soon after the registration of FIR, ACB teams carried out extensive searches at the houses of aforesaid accused J&K Bank officials at nine locations in Kashmir valley, four locations in Jammu and three locations in National Capital Region of Delhi including the houses of Sanjay Jhunjhunwala and Sandeep Jhunjhunwala, he said.
Further investigation in the matter is on and three teams are continuing the investigation/searches in National Capital Region, Delhi, sad ACB spokesman in a statement.