The Central Bureau of Investigation (CBI) on Thursday registered a case against former Aircel promoter C Sivasankaran and his company’s executives in an alleged Rs 6-billion bank fraud case. The agency also booked 15 senior executives, current and former, of IDBI Bank.
The list of bankers booked includes Kishor Kharat, current managing director (MD) and chief executive officer (CEO) of Indian Bank, and Melwyn Rego, MD and CEO of Syndicate Bank. Kharat was MD and CEO of IDBI Bank between August 2015 and March 2017. Rego, who also served as the chief of Bank of India before heading Syndicate Bank, had served as deputy MD of IDBI Bank till August 2015.
Both Kharat and Rego were shuffled to other banks by the government in April-May 2017 for failing to do enough for the improvement of their organisations. The move at that time was unprecedented.
Other executives booked include the former CMD of IDBI Bank, M S Raghavan, and the bank’s former deputy MD, B K Batra.
IDBI Bank in a statement said it had given a loan to Axcel Sunshine in February 2014, which became a non-performing asset (NPA) in December 2015.
“The loan has been fully provided for. The bank initiated actions to recover dues from the borrower in August 2016,” the bank said.
“The CBI has, in this context, been examining certain documents relating to the loan given by IDBI Bank and has spoken to the senior officers who had handled the case. The officers are providing the requisite information and clarification to the investigating authorities,” the statement said.
Earlier in the day CBI searched 50 locations in Delhi, Faridabad, Mumbai, Gandhinagar, Chennai, Bengaluru, Belgaum, Hyderabad, Jaipur and Pune. Senior CBI officials said Sivasankaran’s firms, Axcel Sunshine and Win Wind Oy, allegedly defaulted on loans worth Rs 6 billion from IDBI Bank.
Axcel is based out of the British Virgin Islands while Win Wind Oy is based in Finland. Both counties are considered tax havens.
“The case was registered under sections relating to criminal conspiracy, cheating and corruption against Axcel Sunshine on allegations of perpetrating fraud through the loan accounts,” a CBI official said.
Other group companies include Lotus Ventures Investment, and Indian Telecom Holdings of Mauritius, Siva Palm of Singapore, Chennai-based Siva Industries and Sterling Agro Product and Processing.
According to the official, the FIR lists the modus operandi of Sivasankaran’s companies.
In October 2010, the bank had sanctioned Rs 3.2 billion in loans to Win Wind Oy. The firm later applied for bankruptcy in Finland, due to which the loan was declared an NPA.
Despite that, IDBI in 2014 sanctioned another loan of Rs 5.23 billion to Axcel Sunshine. Allegedly, the loans were used to repay loans of Win Wind Oy.
“This is in gross violation of the Reserve Bank of India (RBI) guidelines on foreign investments in India, which amounts to fraud committed by top executives of the company and banks to derive illegal gains, leading to a loss of about Rs 6 billion to IDBI Bank,” the CBI official said.