MUMBAI: The Enforcement Directorate (ED) on Tuesday registered a money laundering case against Nationalist Congress Party (NCP) chief Sharad Pawar, his nephew and former deputy Chief Minister of Maharashtra Ajit Pawar along with several others in the Maharashtra State Cooperative Bank (MSC) scam.
The Economic Offences Wing (EOW) of the Mumbai police had registered an FIR after the directives of the Bombay High Court last month after it heard public interest litigation in this regard.
Consequently, an enforcement case investigation report (ECIR) too was registered on Monday (September 23) against the then Chairman, MDs, Directors of the MSC bank. They include Sharad Pawar, Ajit Pawar, Diliprao Deshmukh, Ishwarlal Jain, Jayant Patil, Shivajirao Nalvade, Anandrao Adsul, Rajendra Shingane, Madan Paul and others.
Though the accused included leaders from all the political parties, the majority of them are from the NCP.
It is alleged that the then top executives like the Chairman, MDs, Directors, CEOs, managerial staff of MSC bank and office bearers and directors of Sakhar Karkhanas (cooperative sugar factories - CSF), Soot Girnis (ginning and spinning mills) and other processing units were given loans in a fraudulent manner by MSC Bank and in process several illegalities were committed.
While the accused were allegedly complicit in causing losses to the tune of Rs 1,000 crore to MSC bank between 2007 and 2011, the scam is pegged at Rs 25,000 crore.
The loans were provided to CSFs by the officials of the MSC bank, who were connected with the owners of CSFs. There were several irregularities in the sanctioning of the loans committed, only with the purpose of extending benefits to the Directors of the lending bank, for personal gains thereby defrauding and cheating the bank and its shareholders, said officials related to the probe.
Loans were sanctioned to CSFs, despite having weak financials and negative net worth. No collateral was taken in many cases and loans were extended on basis of fraudulent and dishonest representation to the bank.
Additional working facilities were also extended to a certain few CSFs without having any prudent reasons. Thereafter, due to the alleged mismanagement and underutilization of capacity and increasing overhead expenditure these CSFs became sick and we sold by decision taken by Board of directors at a price much below the reserve price to avail wrongful gain to the purchaser.
The purchasers had personal or political links to the board of directors and the consent of borrowing units were not taken before undertaking such sale, clearly shows the dishonest intentions on part of Board of directors, the officials added.
Some of the irregularities found in the sale of these units by Board of directors of MSC bank include -
The CSFs were sold at a price much lower than the reserve price; There was no rules followed to the fix the reserve price as it was fixed on basis of the interest of the purchasers be it market value, Realizable value or Distress value of the property; Forged documents like sale certificate were made in some instances in which the actual sale (as per sale deed) was done at much lower level than mentioned in sale certificate; Sale were at instances done without inviting the tender; Selling off units at throwaway prices to relatives.
Thus, various guidelines laid out by the NABARD, RBI and The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI) were flouted by the directors by sanctioning illegal loans, giving loans to the related parties without disclosing it to the bank and showing it as related party transactions.
There was huge misappropriation of funds on part of committee members and directors and loan committee members of MSC bank, acting in connivance to siphon off the money and in process causing huge losses to the bank.
The ED has registered a case in this regard and further investigation in the matter is under progress, the officials said.