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The Serious Fraud Investigation Office (SFIO) has arrested Neeraj Singhal, erstwhile promotor of Bhushan Steel Ltd in relation to siphoning of funds.
Neeraj Singhal is accused of siphoning off more than ₹ 2,000 crores of funds from loans availed by Bhushan Steel via the use of more than 80 companies, the Finance Ministry says.
Singhal was produced before the court of Competent Jurisdiction yesterday and will remain in Judicial Custody till August 14, 2018. This is the first arrest made by the SFIO since it was given power of fraud investigations last year.
Bhushan Steel was one of the 12 cases referred by RBI for insolvency proceedings. It was also the first one of these 12 cases to have been successfully resolved with Tata Steel making the acquisition.
Singhal had, however, appealed against Tata Steel’s eligibility at the NCLAT. The NCLAT reserved its order in the appeal while clubbing it with other appeals.
The arrest has been made in exercise of the powers under Section 212(8) of the Companies Act, 2013, for indulging in serious corporate fraud punishable under Section 447 of the Companies Act, 2013.
“During the course of the investigation, the team has found that the erstwhile promoters of Bhushan Steel have used multitude of complex, fraudulent maneuvers to divert/siphon-off funds amounting to thousands of crores raised by the then management of BSL from Public Sector Banks using its several Associate Companies. This has led to wrongful losses to the banks and other investors in these companies”, says the press release.
The press release further says the erstwhile Promoters/ Directors of Bhushan Steel have not been cooperating during the investigation until now, including failing to appear before the investigation team and concealing material facts.