The Supreme Court on Monday sought responses from the Ministry of Corporate Affairs and others on a petition alleging “glaring inaction” by investigative agencies into alleged criminal theft and money laundering of Rs 12,800 crore of loan advanced to Amtek Auto by 27 banks. The company’s key managerial personnel, which include promoters and directors, over 127 related parties and several benaamidars, are alleged to be party to the theft.
A bench led by Chief Justice UU Lalit also sought responses from the CBI, Enforcement Directorate and Serious Fraud Investigation Office as to why they should not be asked to investigate the complaint and appoint its former judge to oversee the probe.
Amtek Auto, which owed Rs 12,800 crore to banks and others, featured on the first list of 12 companies that were referred by the RBI for initiating insolvency process in 2017. The resolution process has now concluded with US-based hedge fund Deccan Value Investors taking over the company for about Rs 2,700 crore.
The petition filed by advocate Jaskaran Singh Chawla said a whistle blower, who had given all the details of the scam, has levelled serious allegations of fraud and irregularities against “key managerial persons” of AAL and its resolution professional Dinkar T Venkatasubramanian.
Citing EY’s forensic audit report of March 13, 2018, which covered transactions by AAL from July 2015 to July 2017, counsel Jai Dehadarai told the SC that the report indicates large-scale fraudulent transactions between Amtek Auto and its over 127 related parties controlled by former Amtek Auto employees who had acted as benamidaars.
Alleging that the RP had also failed to take steps to initiate any criminal proceedings despite the EY report pointing out to “clear fraud,” the petition said the RP failed to take any action to recover the siphoned off monies, indicating his connivance.
“Despite glaring indications of gross siphoning, Venkatasubramanian for reasons known best to himself did not commence proper forensic audit of the transactions made by AAL and also not beyond two-year review period. Certain crucial underlying documents pertaining to sale of fixed assets, loans provided by AAL, bank statements of lenders, etc, were not provided to EY,” he argued.
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Dehadarai further told the SC that AAL had manipulated its books of accounts to present a fiscal position which was entirely false and unsubstantiated. Despite this, neither the RP nor EY deemed it fit to report these instances of fraud to any of the investigating authorities.
AAL has also granted loans to the tune of Rs 363.98 crore to 10 of its potentially related parties (PRPs) for which it had no underlying supporting documents whatsoever and against which AAL generated no interest income. Shockingly, out of the Rs 363.98 crore, Rs 75.62 crore was given as loan by AAL to its PRPs to repay the principal and interest liabilities of those PRPs. Clearly, the promoters and other accused persons have siphoned off monies from AAL by wrongly classifying them as loans,” the petition said.