'Industrialist' scripts Rs 6,200 crore swindle with 60 shell firms

NEW DELHI: A Kolkata-based businessman weaved a web of 60 shell companies with drivers, house-keeping staff, office boys, junior staff and relatives as directors and created a fictitious turnover of thousands of crores in iron & steel manufacturing, all on paper with no real business activity involved, and swindled a consortium of govt banks of more than Rs 6,200 crore, with the head of one of the lead banks playing accessory.

The scam was scripted by Sanjay Sureka, who created dozens of shell entities and with the help of S K Goel, then CMD of Uco Bank, managed to get loans of Rs 6,200 crore. "Against loans of over Rs 6,200 crore, the company's liquidation value barely reached Rs 600 crore, and assets sold so far have realised only Rs 434 crore," ED has said in its investigation report.

The entire operation was unearthed with Goel's arrest by ED on May 16 at his residence in New Delhi. The agency later identified properties worth over Rs 106 crore associated with family members and aides and attached them. Sureka and his associates were arrested in Dec 2024, as the agency started probing money laundering based on a CBI FIR against them.

According to an ED investigation report, at the centre of this scam was Concast Steel & Power Ltd (CSPL) - once a flagship iron & steel group with plants across West Bengal, Odisha and Andhra Pradesh - which was taken over by Sureka in 2008. Sureka conjured up the shell entities and with the help of Goel, who served as CMD of Uco Bank between 2007-2010, managed to get a total of Rs 6,200 crore in loans without interest and penalty.

This money was laundered by the accused and quid pro quo to Goel was transferred in the name of shell companies that purchased properties on the bank CMD's behalf with the ownership of these firms later being transferred to Goel's family members.

"It is a case study in how an entire financial ecosystem can be manipulated through fake turnover, circular transactions and system-wide blind spots, ultimately leaving public sector banks poorer by more than Rs 6,210.7 crore, excluding interest," a senior official said.

The official further said 60 shell companies sprang up under the directorship of drivers, office boys and junior staff to help Sureka justify massive flows of funds.

ED's investigation unearthed fake sales, purchases and transport billings where CSPL "pretended to buy and sell iron and steel products" with associated entities, backed by forged invoices, ledger entries, and transport documents. "Fake transportation receipts were prepared to show trucks carrying goods between factories and shell companies, even though no truck ever moved, no goods were loaded, and no delivery was made. Yet on paper, CSPL looked like a bustling, high-volume operation with continuous production and sales," a source said.

The probe further revealed that neither sale proceeds nor payments for purchases were made through banks, 99% of the transactions were merely book entries. Yet, during the entire operation lasting several years, it did not raise any alarm bells in the banks, which continued lending.

"This meant Concast was essentially selling to itself and then realising these payments through accounting fiction. By 2017, the deception hit its peak - 99% of all sales to these entities were settled through book adjustments, not a single real rupee flowed in through the banking system," sources said.

Purchases tell the same story. Over 50% of all raw material sourcing came from the same web of related-party entities. And just like sales, almost 90% of payments to these "suppliers" were made through internal adjustments - no real cash outflow, no genuine material movement, just rotating entries to manufacture expenses, inflate working capital needs, and justify massive fund withdrawals, the probe report said.

Select The Times of India as your preferred source on Google Search