SFIO Files 70,000 Page Complaint against Bhushan Steel for Exploitation of Corporate Structure

Highlights

1. Bhushan Steel has been issued a 70,000 page complaint filed by the Serious Fraud Investigation Office (SFIO).
2. The promoters of Bhushan Steel utilized more than 150 companies to generate complicated set of transactions for siphoning funds to deceive the lenders
3. Bhushan Steel also participated in a scam, overvaluing of assets by INR 15,000 crore, write-off inventory worth around  INR 6,000 crore, trade receivables of up to INR 1,250 crore.

Bhushan Steel has been issued a 70,000 page complaint filed by the Serious Fraud Investigation Office (SFIO). The investigation agency has found massive exploitation of the corporate structure in which it lead to reduction in corporate governance requirements to paper formalities.

Bhushan Steel had defaulted various loans and the banks had to take reduction in the stated value of an asset of more than INR 20,000 crore as part of the resolution process.

The complaint has been registered in the special court, Dwarka, New Delhi.

Earlier, the SFIO also arrested company’s former MD Neeraj Singal, who is out now on interim bail.

Among other things, the probe agency also discovered false exploitation of letter of credits of around INR 45,000 crore, utter misuse of the first time adoption of IND-AS in falsifying the financial statements of the company.

Bhushan Steel also participated in a scam, overvaluing of assets by INR 15,000 crore, write-off inventory worth around  INR 6,000 crore, trade receivables of up to INR 1,250 crore.

The promoters utilized more than 150 companies to generate complicated set of transactions for siphoning funds to deceive the lenders and investors of the company.

The investigation unearthed the extent of abuse of the corporate form by the promoters who operated the listed company more like a proprietorship concern reducing corporate governance requirements to paper formalities.

The role of statutory auditors has been questioned again for their involvement in such scams. The SFIO has also pointed out finger on the role of bank officials participating in such fraudulent activities.

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Important Link:

1. SFIO finds extreme misuse of corporate structure in Bhushan Steel case