CBI arrests CMD of a Firm in Bank Fraud of more than Rs.3,800 Crore

The Central Bureau of Investigation (CBI) conducted searches at four locations in Mumbai after filing a FIR against Unity Infraprojects Ltd, its then-CMD Kishore Krishnarao Avarsekar, and others for allegedly defrauding a consortium of banks to the tune of Rs 3,847.58 crore, officials said on Monday.

CBI took action in response to a complaint filed by the SBI, one of the consortium members, alleging that the fraud occurred at its Commercial Branch in Mumbai, where the accused persons syphoned off the “Bank’s funds by doing fictitious transactions, manipulated and fudged books of accounts with the intent to defraud and cheat the bank and to gain unlawfully at the expense of the Bank’s funds.”

According to the officials, searches were recently conducted at the accused’s residence.

On June 24, 2014, the account of the 44-year-old infrastructure company, which had taken over Rs 3,800 crore from 23 lenders against moveable and non-movable assets as well as personal and corporate guarantees, became a non-performing asset. After forensic auditing revealed irregularities, it was declared a fraud five years later.

The bank claimed that the fraud was discovered during a forensic audit conducted by BDO India LLP, which submitted its report on September 25, 2019.

The report discovered, among other things, fictitious transactions, improper adjustment entries passed to accommodate fictitious accounting entries in order to defraud the bank by fudging the data, and fund diversion through non-consortium accounts.

It also cited unexplained excess pay-outs with the intent of syphoning off bank funds, as well as related party transactions to divert borrowed funds.

The agency has filed charges against the company, its former chairman, and former directors and executives under the IPC sections of criminal conspiracy (120B), cheating (420), and the Prevention of Corruption Act.