Money laundering case: ED searches premises linked to Videocon group

The Enforcement Directorate on Friday conducted searches at multiple premises in Mumbai and Delhi associated with the Videocon group. The searches were in connection with a money laundering case the agency is probing against the company and its chairman Venugopal Dhoot, related to alleged loan fraud by the group in the sale of an oilfield in the African nation of Mozambique.

“The raids are currently going on at multiple locations in Mumbai and Delhi among certain other places. We have evidence that the company has diverted loan funds,” an ED official said.

The ED case is based on a CBI FIR registered last year against Dhoot, who has been accused of duping a consortium of banks led by the State of Bank of India of hundreds of millions of dollars. Along with Dhoot, who has been booked under charges of corruption, cheating and criminal conspiracy, the CBI has also booked unknown officials of the consortium of banks.

The case is related to an oil block in Mozambique, where Videocon had interests and picked up a loan from Standard Chartered Bank in London. This loan was repaid by the bank consortium led by SBI against the Mozambique assets, but the consortium did not take charge of the assets and Videocon continued to avail of credit facility from SCB on the block. The block was finally sold to ONGC Videsh Ltd and Oil India Ltd in 2014 for $2,519 million.

The FIR was a result of the completion of a preliminary enquiry that CBI had opened earlier against unknown officials of Ministry of Petroleum and Natural Gas, ONGC Videsh, Oil India Ltd, Bharat Petro Resources Ltd and the consortium led by SBI Cap. The preliminary enquiry had alleged that these entities had “colluded with the Directors and Promoters of M/s Videocon Mozambique Rovuma 1 Ltd (VMRL), a subsidiary of M/s Videocon Hydrocarbons Holding Ltd (VHHL) (a company registered in Cayman Islands) with an intent to cause undue pecuniary gain to Videocon Industries Limited (VIL)”.

According to CBI, the preliminary enquiry found that in 2008, VHHL acquired 10 per cent participating interest in the oil and gas block in Rovuma Area 1 Block of Mozambique from M/s Anadarko, a US-based petroleum company. VHHL also had oil and gas assets in Indonesia and Brazil.

In April 2012, the bank consortium led by SBI sanctioned the Standby Letter of Credit (SBLC) facility of $2,773.60 million to VHHL for appraisal and development of their overseas oil and gas assets in Mozambique, Brazil and Indonesia, and other funding requirements. The SBLC facility at $1,103 million was refinanced which includes outstanding of $400 million of Standard Chartered Bank, the CBI has alleged. “The first charge on VIL’s oil and gas asset was a part of CSB security,” the CBI has said.

In February 2013, the VIL informed the consortium that the loan of SCB has increased from $400 million to $530 Million and requested the consortium to pay off the loan and to take over charge of the assets. “The SBI led consortium without any verification / inquiry, approved and paid the loan of USD 530 million to SCB, London,” the CBI has said, adding that it did not even tale charge of the assets nor was the loan account of SCB closed by VHHL.

“The SBI consortium in connivance with VIL did not create the charge on the assets with dishonest intention to facilitate VHHL, who continued to avail the facility from SCB London backed by Mozambique oil and gas asset,” the CBI has said.

To get lender NOC for sale of assets to ONGC Videsh and OIL, in November 2013, VIL requested the consortium to pay the outstanding at SCB, London from the sale proceeds of the Mozambique asset. “The SBI led Consortium in conspiracy with VIL did not raise any objection to the fact that the outstanding at SCB, London has been already paid by the consortium in Feb 2013. It was agreed that the outstanding at SCB London be paid and should not exceed USD 650 Million,” CBI has said, adding that despite this, over $700 million was paid to SCB and no one raised any flags.

CBI has also accused VIL of diverting funds, saying, “The enquiry has revealed that the VIL used the funds availed from SCB for some other purposes or siphoned the same in some other accounts of Videocon or its promoters. Enquiry has further revealed that till December, 2013 the VIL spent an amount of only USD 374 million, USD 554.83 and USD 25.25 million towards Mozambique, Indonesia and Brazil oil and gas assets respectively since date of acquisition to December, 2013 against which VHHL availed the facility of USD 1616 Million.”