Rs 4,000 Crore Bank Loan via 250 Shell Companies Used to Buy Private Jet: What’s Next?

The Enforcement Directorate (ED) has recently frozen assets totaling Rs 209 crore in connection with a Rs 4,000 crore bank fraud involving Nagpur businessman Manoj Jayaswal and his firm, Corporate Power Limited (CPL). This move comes after a series of raids conducted from August 12 to August 14, 2024, across 14 locations linked to CPL and its promoters.

The case, rooted in financial transactions between 2009 and 2013, revolves around fraudulent activities where CPL allegedly manipulated project cost statements to secure massive loans from Union Bank of India. These loans, intended for power projects in Jharkhand, were diverted for personal benefits, including the acquisition of a private jet, which now sits grounded at Nagpur airport due to non-repayment.

Further investigations revealed that Jayaswal’s Abhijeet Group had established an intricate network of 250 shell companies and 20 charitable institutions to launder the illicit funds. These entities were used to book fictitious transactions, inflating the company’s financial standing and facilitating the layering of the proceeds of crime. The ED also uncovered unencumbered assets worth Rs 50 crore, which are now under scrutiny.

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The origins of this scandal trace back to the coal block allocation scheme during the UPA regime, where the Abhijeet Group was a major beneficiary. However, the subsequent repossession of these blocks led to financial turmoil for the group, resulting in substantial loan defaults. By 2013, the loans had turned into non-performing assets (NPA), prompting a Central Bureau of Investigation (CBI) inquiry in 2022. This investigation laid the groundwork for the ED’s current actions.

The magnitude of the fraud, exacerbated by the compounding interest on the loans, has escalated the total liability to over Rs 11,300 crore. This case underscores the vulnerabilities within India’s banking system and the dire need for stringent financial oversight to prevent such large-scale frauds in the future.

The investigation is ongoing, with the ED likely to uncover more details as it delves deeper into the operations of Jayaswal’s companies and their affiliates. The freezing of assets is seen as a critical step in preventing further misuse of funds and holding the perpetrators accountable for their actions.

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