The Enforcement Directorate on Monday said it has arrested Kewal Krishan Kumar, chairman and managing director (CMD) of Delhi-based Shakti Bhog Foods Limited, in a money laundering case linked to an alleged multi-crore bank loan fraud.
Kumar was arrested on Sunday here and later produced before a special Prevention of Money Laundering Act (PMLA) court that sent him to ED custody till July 9, the federal investigative agency said in a statement.
The agency, prior to the arrest, also raided at least nine premises in Delhi and Haryana.
“During the searches, various incriminating documents and digital evidences have been recovered,” it said.
The ED case filed under criminal sections of the PMLA is based on a CBI FIR that was filed early this year against Shakti Bhog Foods Limited for an alleged fraud of Rs 3,269 crore on a consortium of 10 banks led by the State Bank of India (SBI).
The CBI complaint came after the SBI registered a complaint against the company.
According to the SBI, the directors allegedly falsified accounts and forged documents to siphon off public funds.
The 24-year-old company, which is into manufacturing and selling wheat, flour, rice, biscuits, cookies etc., had grown organically as it ventured into food-related diversification over a decade with a turnover growth of Rs 1,411 crore in 2008 to Rs 6,000 crore in 2014, the bank had said.
The ED said the “allegations against the accused include diversion of funds from loan accounts by round-tripping through related entities and siphoning of funds was being done by way of suspicious sale/purchase from various entities.”
The bank report to the CBI said the turnover growth of the company came to an abrupt halt in 2015 with the account turning into a Non-Performing Asset (NPA) and it was ultimately declared a fraud in 2019.
The account turned an NPA on account of inventory losses owing to a steep fall in paddy prices, under-utilisation of capital expenditure in the rice and paddy segments and a delay in the tie-up funds to tide over losses, an investigation report by the bank on staff accountability had noted in 2017.
A forensic audit done by the bankers pointed out that the company, in its account books of financial year 2015-16, showed that its inventory worth over Rs 3,000 crore got damaged due to pests and was sold at substantially low prices.
This was contradictory to the stock and receivable audit report, which showed that the company had a stock of over Rs 3,500 crore in September 2015, its warehouses were fully stocked and none of the inventory was obsolete or slow moving, the bank had alleged in its complaint.
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