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The Directorate of Enforcement has filed a supplementary prosecution complaint before the Special Court under the Prevention of Money Laundering Act in Port Blair against former Member of Parliament Kuldeep Rai Sharma and 13 other individuals and entities in connection with the Andaman Nicobar State Cooperative Bank fraud case. The complaint, submitted on November 6, 2026, by the agency’s Kolkata Zonal Office-II, arraigns new accused persons including Jayanta Bala, empaneled property valuer J. Suresh Chandran, John Robert Babu, Anil Kumar, Md. Ali, P. Abhilash, and Kiran Lal N. H., alongside their associated firms. With these fresh inclusions, the total number of accused named in the multi-crore financial scandal has reached 52.
The money laundering probe stems from a first information report registered by the Crime and Economic Offences Police Station of the Andaman and Nicobar Police against private individuals and senior bank officials. According to investigators, key management personnel of the cooperative bank, including its then vice-chairman Kuldeep Rai Sharma and officers responsible for loan approvals, conspired with external accomplices to bypass credit norms. In total, the federal agency has identified proceeds of crime exceeding Rs 500 crore, pointing to systematic manipulation of banking procedures to siphon institutional funds without any intent of repayment.
Shell Entities and Inflated Land Values Used to Siphon Bank Capital
The investigation revealed that the accused set up 23 shell companies, frequently registering them under the names of associates or dummy directors. These entities received massive loan disbursements within months of incorporation despite having no prior business footprint or commercial track record. Loans amounting to approximately Rs 301.50 crore were sanctioned to 21 shell firms alone, of which nearly Rs 271 crore turned into non-performing assets.
To secure these advances, low-value parcels of land were pledged as collateral after their values were artificially inflated several times over through collusion between bank officials, private persons, and empaneled valuers. In multiple instances, the same mortgaged properties were pledged repeatedly to secure additional tranches of debt. As soon as the loan amounts were released by the bank, the funds were swiftly withdrawn in cash or transferred across a layered network of corporate and personal accounts rather than being deployed for legitimate commercial activities.
Diversion into Commercial Real Estate and Five Percent Kickback Network
Federal investigators established that the fraudulent operations extended beyond dummy firms into active commercial businesses. Regular enterprises were also sanctioned credit lines upon paying an illicit commission of approximately 5 percent of the sanctioned loan volume to Kuldeep Rai Sharma and senior cooperative bank executives.
The diverted funds were channeled into high-value assets to obscure true ownership, including acquisitions of land parcels, construction of hotels and resorts, procurement of semi-submarine tourist vessels, and the settlement of past liabilities. Properties were routinely acquired through powers of attorney and agreements to sell without registered sale deeds, keeping legal titles concealed. Many of these unverified land holdings were subsequently re-mortgaged to obtain fresh credit lines that eventually turned delinquent. In addition, the inquiry determined that Sharma and his wife, Vinita Sharma, directly benefited from fraudulent credit facilities totaling about Rs 81.10 crore obtained through entities affiliated with them.
Enforcement Action, Key Arrests, and Property Attachments in Port Blair
Prior to the filing of the supplementary complaint, the agency arrested Kuldeep Rai Sharma, former managing director K. Murugan, who has since passed away, loan officer K. Kalaivanan, and Sanjay Lal. The initial prosecution complaint in the bank fraud matter had been submitted on November 14, 2025, against 39 individuals and corporate entities.
As part of the asset recovery process, the agency has attached properties valued at Rs 326.91 crore under two separate legal orders. These include provisional attachments worth Rs 205.56 crore issued on February 10, 2026, which were subsequently confirmed by the Adjudicating Authority, alongside further attachments worth Rs 121.35 crore issued on November 5, 2026. In its latest court filing, the agency has formally requested the special court to order the absolute confiscation of all attached assets.
