Simbhaoli Sugar, OBC tank on fraud probe by CBI

Randal Sanchez
February 26, 2018

In the latest case of defaulting on loans by large companies, the CBI has registered a case against India's largest sugar mill Simbhaoli Sugars, its Chairman Gurmit Singh Mann, Deputy Managing Director Gurpal Singh and others in a case involving about Rs 97.85 crore.

Ghaziabad-based Simbhaoli Sugars, its directors, CEO, CFO, unknown bank officials and other private persons have been booked by the agency on charges of cheating, criminal conspiracy and under sections of the Prevention of Corruption Act.

In the current FIR, CBI has actually declared that Oriental Bank of Commerce approved a loan totaling up to Rs 148.59 crore to Simbhaoli Sugars in December 2011 after the business approached it with a proposition for funding sugarcane farmers under the tie-up plan with the business (with an optimum limitation of Rs 3 lakh per farmer). It is also listed on the Bombay Stock Exchange. This resulted in outstanding loan of Rs. 97.85 crore (as alleged fraud) and fresh corporate loan of Rs 109.08 crore.

On Sunday, the CBI carried out searches on the residential and official premises of the accused in Delhi and Uttar Pradesh, an official said.

This is the second case in three days registered by the CBI upon complaints from the Oriental Bank of Commerce.

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On May 13, 2015, the bank declared it as loan fraud of Rs 97.85 crore to the Reserve Bank of India.

"It was alleged that the Oriental Bank of Commerce sanctioned a loan amounting to Rs 148.60 crore in the year 2011 to the company (Simbhaoli Sugars)".

It turned out that Simbhaoli issued improper KYC certificates in the names of farmers. "The company has committed breach of terms of MoU and diverted funds for purposes other than that agreed upon between the company and our bank", the OBC said. This way, OBC claimed, Simbhaoli Sugars has misappropriated the money lent by it and "there is clear cut division of funds".

Surprisingly, in addition to existing NPA, OBC, under several banking plans approved another business loan of Rs 110 crore to Simbhaoli In January 2015 to pay its exceptional loan of Rs 97.85 crore. The FIR filed by agency focuses on two loans - Rs 97.85 crore which was declared fraud in 2015 and another corporate loan of Rs 110 crore which was used to repay the previous loan.

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