ED Arrests Five In Connection with Rs 56,000-Crore Bhushan Steel Bank Loan Fraud Case

The Enforcement Directorate (ED) Delhi announced on Friday the arrest of five individuals in connection with an alleged Rs 56,000-crore bank loan fraud and money laundering case linked to the erstwhile Bhushan Steel. 

As per the reports, the arrested individuals include Ajay Mittal (brother-in-law of promoter Neeraj Singal), Archana Mittal (wife of Ajay Mittal and sister of Neeraj Singal), Nittin Johari (then CFO of Bhushan Steel), Pankaj Kumar Tewari (then vice-president, banking), and Pankaj Kumar (then vice-president, accounts).

The ED initiated the investigation based on the prosecution complaint filed by the Serious Fraud Investigation Office (SFIO) against Bhushan Steel, invoking scheduled offences under the Prevention of Money Laundering Act, 2002.

According to the ED spokesperson, the investigation revealed that Bhushan Steel and its managing director Neeraj Singal, along with associates, established multiple shell companies. Funds were rotated among these entities in a chain, which were then used for purposes not intended by the banks, including capital infusion, property purchase, and personal use. 

The promoters and officials of Bhushan Steel allegedly prepared forged documents and made fraudulent representations before banks to discount letters of credit (LCs), diverting funds back into their own companies with malicious intent.

The misappropriation of funds involved fabricated LCs created in favour of JSW Steel and Hindustan Zinc. The diverted funds were then directed to other group-associated companies, causing wrongful losses to the State Bank of India and Punjab National Bank.

Earlier, the ED provisionally attached assets worth Rs 61.38 crore on 8 November 2021, and the attachment order was confirmed by the adjudicating authority on 24 July 2022. 

Neeraj Singal was arrested on 9 June 2023, and is currently in judicial custody. A prosecution complaint against Singal and other accused was filed on 8 August 2023, with cognizance taken by the PMLA court on 7 November 2023.

Ajay Mittal and Archana Mittal knowingly received proceeds of the crime amounting to Rs 70 crore, according to the spokesperson. They also mortgaged property of Bhushan Steel Limited and routed the funds to the family of Neeraj Singal. Nittin Johari, Pankaj Kumar Tewari, and Pankaj Kumar, former employees of Bhushan Steel, were identified as the main individuals in charge of accounts and banking transactions. 

The arrests signify a significant development in the ongoing investigation into one of India's largest bank loan fraud cases.