Letter to PMO prompted raid on Bhatnagars

It was a grievance letter that landed at the Prime Minister's Office (PMO) here that ultimately led the Central Bureau of Investigation (CBI) to book Suresh Bhatnagar and his sons Amit Bhatnagar and Sumit Bhatnagar, the owners of the beleaguered Vadodara-based Diamond Power Infrastructure Ltd (DPIL), for allegedly cheating a consortium of 11 banks of Rs 2,654 crore.

While the Congress linked the DPIL owners with senior BJP leaders and Prime Minister Narendra Modi on Saturday, senior government officials said that based on the grievance letter, which alleged that the company had been submitting false stock statements to leading banks, the PMO directed the Finance Ministry, CBI and Enforcement Directorate (ED) on March 6 to carry out investigations and ascertain facts.

The letter further stated that the company was treating receivables more than 180 days (non-current assets) as less than 180 days (current asset) to get more drawing power in their cash credit accounts.

During the course of investigation, when it was pointed out that the Bhatnagars were claiming proximity to BJP leaders, PM Modi stepped in and called for strict and prompt action in the case.

"The government acted in unison and in a proactive manner," confided the official, denying there was any attempt to sabotage investigations.

After getting a go-ahead from the PMO, the agencies probed the matter and shared their findings with various divisions of the Finance Ministry, that is the Department of Financial Services, the CBDT, Ministry of Corporate Affairs, the Enforcement Directorate and the CBI.

"All the agencies worked as a joint team to ensure optimal outcome," officials added.

The Finance Ministry also directed the banks involved to furnish full details and lodge an FIR. The Bank of India lodged a complaint with the CBI a week after the PMO first sent a letter on this case.

The government wrote another letter on March 20 to ensure that full information is shared between the investigating agencies. A fortnight later, the CBI raided DPIL and booked its directors.

The alleged transactions from the bank started in 2008; the company also fraudulently availed Central Value Added Tax credit of Rs 100.80 crore till 2013.

Interestingly, DPIL had availed the loans despite being named in the Reserve Bank of India's list of defaulters and the Export Credit Guarantee Corporation (ECGC) caution list. According to sources, this would not have been possible without the involvement of bank officials. The CBI has mentioned unknown bank officials in its FIR.

CBI teams raided several places in Vadodara on Thursday, including the firm's office in Gorwa area and the residence of Amit Bhatnagar, the managing director. His brother Sumit is the joint managing director.

DPIL, which is engaged in manufacturing electric cables and other electrical equipments, fraudulently availed credit facilities from a consortium of 11 banks (both public and private) since 2008, leaving behind an outstanding debit of Rs 2,654.40 crore as on June 29, 2016, the CBI said.

At the time of the formation of the consortium in 2008, Axis Bank (with an exposure of Rs 255.32 crore) was the lead bank for the term loan and Bank of India (with an exposure of Rs 670.51crore) was the lead bank for cash credit limits. Other banks which provided loans to DPIL include Bank of Baroda (Rs 348.99 crore), ICICI Bank (Rs 279.46 crore), Allahabad Bank (Rs 227.96 crore), Dena Bank (Rs 177.19 crore), State Bank of India (Rs 266.37 crore), and Corporation Bank (109.12 crore), among others.

In February 2016, RBI declared DPIL's accounts with Bank of India and Bank of Baroda NPAs,

based on an asset quality report prepared by it, while accounts with other banks were declared NPAs from December 2017.

The company, CBI alleged, diverted funds to accounts opened in other banks. CBI officials said they will soon question the owners of DPIL and bank officials who ignored all the guidelines and gave away public money to a company named in RBI's list of defaulters.

Bhatnagar was arrested in March 2015 by central excise officials in Vadodara for evading excise duty to the tune of Rs 42 crore.

Back in 2015, VadFest, a four-day cultural and musical extravaganza, organised under the chairmanship of Bhatnagar, was mired in a controversy after local MLAs expressed displeasure over being ignored. Bhatnagar was also the director of Vadodara Marathon — city's biggest annual event, but he had to relinquish the post following major differences with chairperson Tejal Amin. He later launched Vadodara Navratri Festival.