Singhals paid salary in cash, fudged invoices, says probe
THE SFIO REPORT OR CHARGE SHEET STATES THAT THE SINGHALS HAD UNACCOUNTED MONEY; AND ALL CASH TRANSACTIONS WERE MAINTAINED IN WHITE AND GREEN VOUCHERS
NEWDELHI: A report by the Serious Fraud Investigation Office (SFIO), which is probing alleged financial irregularities committed by the former promoters of Bhushan Steel Ltd (BSL) — Brij Bhushan Singhal and his son Neeraj — states that the Singhals used to pay a substantial amount of salary to their employees “in cash”, particularly before the 2016 demonetisation of old ~ 500 and ~1000 banknotes.
The company was acquired by Tata Steel in May 2018 and was renamed Tata Steel BSL. The Singhals are accused of diverting BSL money; SFIO arrested Neeraj in August and his father filed an anticipatory bail plea in the Delhi high court last month.
The SFIO report or charge sheet, a copy of which has been reviewed by HT, further states that the Singhals had unaccounted money;and cash transactions were maintained in white and green vouchers.
The latter were meant for unaccounted cash generated by selling raw coal, zinc, HR coil, and other products in the open market or through the under-invoicing and over-invoicing of products, SFIO claims.
The white vouchers were meant for cash withdrawn from banks. SFIO, which has been probing the matter since 2016 claims, DB Gupta, former assistant vice-president of the company, who headed the cash department of BSL, “used to receive cash worth around ~20 lakh to ~30 lakh on a daily basis” ,and that he maintained a diary for all cash transactions. The green vouchers were signed by BB Singhal and Neeraj Singhal.
“Investigations revealed that BSL employees were receiving part of their salary in cash, which was given through a system of vouchers signed by BBS or NS (abbreviations used by SFIO for BB Singhal and Neeraj Singhal) and encashed with DB Gupta, who used to destroy these vouchers thereafter,” reads the SFIO report, which was filed in June. The agency has alleged that after demonetisation, the salary bill of BSL increased substantially as all cash payments were shown as regular payments in the books. “The cash was generated from sale of scrap, under-invoicing or over-invoicing from BSL, which was ultimately used for creating the capital for BBS and his family members”.
The Singhals used to pay salaries to employees from this unaccounted income, SFIO alleges. In 2014-15 alone, the salary paid in cash came to around Rs 2.93 crore, SFIO has found. In 2014-15, total salary payment by BSL was Rs 257 crore. This increased to Rs 432 crore in 2015-16.
Gupta purportedly told SFIO that unaccounted cash was also given to “officers of different government departments”; the agency is checking this claim. Kishi Saxena, former vice-president (purchase) of BSL told SFIO that “the ex-promoters of BSL were generating huge cash from sale of material outside the books..”
According to an income tax department probe, around ~165.40 crore was deposited in cash in the bank accounts of BB Singhal, his son Neeraj Singhal, daughter-in-law Ritu Singhal and wife Uma Singhal between April 2010 and March 2011.
The charge sheet states that the Singhals and BSL received loans to the tune of ~ 45,000 crore through illegal means — the money was moved out through 157 companies directly or indirectly controlled by the family.
The 70,000-page probe report has named 284 individuals and entities as accused. The Central Bureau of Investigation (CBI) is also probing the case.
Ranjana Roy Gawai, founder & managing partner of law firm RRG & Associates, who is representing the Singhals, said the allegations are false. “The salary was paid as per industry norms which is corroborated by the fact that even after resolution of the debt of Bhushan Steel and taking over by Tata Steel, the employees are getting the same salary.”