Bank fraud case: Sandesara bros may end up paying more than they owe

NEW DELHI: A fresh calculation by Enforcement Directorate shows that if fugitive Sandesara brothers - Nitin and Chetan - stick to their offer to pay Rs 5,100 crore to lender banks, they will have paid more than what they owe these financial institutions.

Govt has already recovered Rs 4,700 crore from the Sandesaras' Sterling Biotech Ltd (SBL) since 2018, when the agency began its money laundering probe against the duo and attached more than Rs 14,500 crore worth of their assets in India and abroad, including oil rigs, ships and aircraft in Nigeria. With their fresh commitment, the total recoveries would now be over Rs 9,800 crore, sources said. This is much higher than the banks' earlier demand of Rs 6,700 crore as one-time settlement.

A day after Supreme Court took on record the Sandesara brothers' commitment to pay Rs 5,100 crore - if they were allowed to return to India and run their business, and criminal proceedings against them were dropped - there was celebration in ED headquarters over the biggest recovery from accused since enactment of Prevention of Money Laundering Act. The total recovery in the case is now set to touch Rs 10,000 crore.

Their offer will bring relief to an interesting cast that was found to have links with SBL and whose assets were treated as "proceeds of crime" and attached. The attached assets, which may now be released, include properties of actors Sanjay Khan (Rs 3 crore), Dino Morea (Rs 1.4 crore), DJ Aqeel (Rs 2 crore), Congress neta Sonia Gandhi's political secretary the late Ahmed Patel (Rs 2.5 crore) and his son-in-law Irfan Siddiqui's properties worth Rs 2.4 crore, besides 23 luxury vehicles of Sandesara brothers and their associates.

The success in bringing the duo to the negotiating table is also being credited to the accused siblings being declared fugitive economic offenders in Sept 2020.

"This declaration strengthened ED's position considerably because it enabled the agency to seek confiscation of all their properties, irrespective of whether they were proceeds of crime or untainted assets," sources said. This recognised that SBL's promoters had deliberately avoided the jurisdiction of Indian courts.

"It is the continuous pressure created by ED and the coordinated approach of other agencies that compelled the group to eventually seek a resolution on terms acceptable to the lenders and the state. What appears on the surface as a concession is in reality the final step in a long process of enforcement, asset-tracing and legal action, much of it undertaken by ED, which ultimately brought the fugitives to the negotiating table," a senior official said.

The Sandesara brothers and their SBL had already paid Rs 3,508 crore on various dates during legal proceedings before various courts. In addition, the insolvency proceedings against their group entities yielded another Rs 1,192 crore, the official said.

"With this, the total realisation becomes significant. The amounts already recovered (Rs 4,700 crore) along with what is now being ordered by SC (Rs 5,100 crore) add up to Rs 9,800 crore. This is nearly double the figure alleged in the FIR and it shows that the enforcement and recovery process has resulted in a substantial net restitution to the banking system," the official added.

CBI's FIR registered in 2017 had alleged diversion and defaults by the group amounting to Rs 5,383 crore. The lender banks had later proposed one-time settlement for all dues for Rs 6,761 crore. The recoveries of nearly Rs 10,000 crore exceeds even their expectations.
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