New Delhi: The Congress party on Sunday alleged a nexus between the promoters of loan defaulting companies and the Insolvency and Bankruptcy Board of India (IBBI) and raised questions over the 'inaction' from the government side. Senior Congress leader Sanjay Nirupam while addressing the media here said that corruption on a major level was going under the nose of the central government but no inquiry or investigation was being conducted by the government agencies. The party has demanded a CBI investigation to be initiated in such matters so that the corruption nexus is exposed.
Citing the example of Amtek Auto, Nirupam said the government must order a probe into the findings of Ernst and Young's audit report into the insolvency of the company. Nirupam explained in detail how the company managed to procure loans worth Rs 12,500 crores from the nationalised banks and later filed for liquidation. He alleged that the promoters not only got away without any action or inquiry against them but also diverted Rs 7500 Crores worth of assets of the companies to 123 shell companies which they later formed.
"Amtek group has carried out preferential transactions, transactions defrauding creditors, and it siphoned off more than 70 percent of its assets and funds to 123 shell companies," Nirupam said. "The Amtek group of companies took a loan of Rs 25,000 crore from Indian banks. The company was eventually sold for Rs 1,500 crore. Its promoters wrote off assets worth Rs 7,500 crore, and Rs 12,500 crore funds were siphoned off through shell companies," he said, citing the EY report.
"The findings of the EY report are there in front of us but no action has been taken, that is our issue. Why are the promoters of the company being shielded? What connection do they have with the government?" he asked. "No one but the Central Bureau of Investigation (CBI) can probe this matter because it seems Ministry of Corporate Affairs is 'hand in glove', Serious Fraud Investigation Office is short-staffed, and National Company Law Tribunal (NCLT) also seems to be a part of this 'scam'," Nirupam alleged.
The "swindling" by the promoters of Amtek must be probed, he demanded. Citing official figures, Nirupam said that in the last five years, six lakh crore of banks' money has been lost. The Modi government must come out with a white paper on all such insolvency cases, Nirupam said, accusing the government of shielding promoters of several firms that have filed for insolvency recently.
Also read: NCLT orders insolvency proceedings against Supertech Ltd over Rs 432 crore default
Addressing the press conference along with Nirupam, Congress spokesperson Pawan Khera alleged that in the name of resolving the insolvency cases of the companies, institutional corruption is going on. "Nirmala Sitharaman Ji always says these companies took loans during the time of the UPA. But the loan defaults and the loss of money is going on under the Modi government," Nirupam said. He also compared the Amtek case with that of ABG Shipyard.
In February, the CBI booked ABG Shipyard Limited, its former chairman and managing director Rishi Kamlesh Agarwal, and others, for allegedly cheating a consortium of lenders led by the ICICI Bank in the biggest such bank fraud. Congress had questioned why the government "took five years" after the liquidation proceedings of ABG Shipyard to lodge an FIR in connection with the alleged duping of 28 banks.
The Insolvency and Bankruptcy Code (IBC) was enacted in 2016 under the Modi government according to which any company not being able to run the business can apply to National Company Law Tribunal and apply for insolvency. In accordance with the IBC, there is a statutory board IBBI which is authorised to take a call on the applications from companies who file for bankruptcy or insolvency.
As per the information procured from the IBBI, a total of 4,946 cases of insolvency has been admitted by the board between December 2016 to December 2021. Of them, 457 cases of insolvency have been dissolved by the board so far. These 457 companies owed a total of 8.30 lakh crore of which only 2.30 lakh crore could be recovered from these companies after the liquidation process.
Referring to the recent RBI report on 'Dirty Dozen' which released the name of 12 companies who defaulted on loans worth 3.45 lakh crore and later filed for liquidation, only 75000 crores could be recovered by the lenders. This means the nationalised banks lost 2.5 lakh crore in the process but except for a few promoters, the rest of them got away without any kind of action against them.
"Is this kind of a system being protected by the government or the government is itself involved in the process?" asked Nirupam while presenting many facts and figures of half a dozen defaulter companies and their promoters as examples. "The gist of his press conference is that there is institutional corruption going on in this country in the name of resolution. They have provided a framework to legitimize a scam running into Lakhs of crores. People of India have a right to know what is happening to their money parked in the nationalised banks" said Pawan Khera.
Also read: No PSB bank employees found involved in Rs 14,349 cr ABG Shipyard fraud case: Sitharaman
