Shakti Bhog CMD arrested in money laundering case
The ED on Monday said it has arrested Kewal Krishan Kumar, chairman and managing director (CMD) of Delhi-based Shakti Bhog Foods Limited, in a money laundering case linked to an alleged multicrore bank loan fraud.
Kumar was arrested on Sunday here and later produced before a special Prevention of Money Laundering Act (PMLA) court that sent him to ED custody till July 9, the federal investigative agency said.
The agency, prior to the arrest, also raided at least nine premises in Delhi and Haryana. “Various incriminating documents and digital evidences have been recovered,” it said. The ED case filed under criminal sections of the PMLA is based on a CBI FIR that was filed early this year against Shakti Bhog Foods for an alleged fraud of ~3,269 crore on a consortium of 10 banks led by SBI.
The CBI complaint came after the SBI registered a complaint against the company.
According to SBI, the directors allegedly falsified accounts and forged documents to siphon off public funds.
The 24-year-old company, which is into manufacturing and selling wheat, flour, rice, biscuits, cookies etc., had grown organically as it ventured into food-related diversification over a decade with a turnover growth of ~1,411 crore in 2008 to ~6,000 crore in 2014, the bank had said.
The ED said the “allegations against the accused include diversion of funds from loan accounts by roundtripping through related entities and siphoning of funds was being done by way of suspicious sale/purchase from various entities.” The bank report to the CBI said the turnover growth of the company came to an abrupt halt in 2015 with the account turning into a non-performing asset (NPA) and it was ultimately declared a fraud in 2019.
The account turned an NPA on account of inventory losses owing to a steep fall in paddy prices, under-utilisation of capital expenditure in the rice and paddy segments and a delay in the tie-up funds to tide over losses, an investigation report by the bank on staff accountability had noted in 2017.