SFIO Arrests Bhushan Steel’s Former Promoter Neeraj Singal For Siphoning Loans

The Serious Fraud Investigation Office arrested the former promoter of Bhushan Steel, Neeraj Singal, for siphoning bank loans of about Rs 2,000 crore.

Singal was produced before a court, which sent him to judicial custody till Aug. 14, according to a statement by the Ministry of Finance and Corporate Affairs. Investigation by the SFIO revealed that the former promoters of Bhushan Steel used fraudulent ways to siphon funds raised from state-owned banks using several associate companies. “This has led to wrongful losses to the banks and other investors in these companies.”

The steelmaker, which owed lenders led by State Bank of India Rs 56,000 crore, was among the first 12 big stressed accounts identified for resolution under the Insolvency and Bankruptcy Code by the central bank. The banks had to take a 37 percent haircut after Tata Steel Ltd. emerged the highest bidder for the troubled company. That came even as SFIO was probing diversion of funds.

The former promoters and directors of the company didn’t cooperate with the agency during its investigation, and tried to conceal “material facts”, according to the ministry’s statement. Fraudulent activities contributed to the company becoming insolvent, the ministry tweeted. Investigation is still on.

Singal was held under Section 212(8) of the Companies Act, 2013, that empowers officers of the rank of director, additional director or assistant director to arrest an offender based on evidence. He is accused of fraud punishable under Section 447 of the act, the statement said. That provides for an imprisonment of six months to 10 years, along with a fine not less than the amount involved in the fraud.