‘PMC Bank fraud worth Rs 6.6K-crore’: ED in 7,000-page charge sheet

The Enforcement Directorate (ED) on Monday filed its charge sheet in the money-laundering case in the multi-crore Punjab and Maharashtra Co-operative Bank (PMC) scam. The charge sheet runs into approximately 7,000 pages. The scam is also being investigated by the economic offences wing (EOW), which is expected to file its charge sheet in January 2020.

ED has pegged the scam at Rs 6,670 crore and named Housing Development Infrastructure Limited’s (HDIL) promoter Rakesh Kumar Wadhawan, his son Sarang, PMC Bank’s former managing director Joy Thomas and ex-chairperson Waryam Singh in the charge sheet. “The bank loans were laundered. The money was utilised to purchase properties,” said a source privy to developments.

The agency had seized incriminating documents during searches conducted during the investigation and also provisionally attached properties linked to the Wadhawans, including flats in Bandra and properties in Vasai and Alibaug. ED is also scanning properties and investments in UAE and London.

The charge sheet also mentions the “ever-greening” of loans, which is a term for banks propping up ailing companies with fresh loans even as these firms struggle to repay old debts. Over 73% of PMC Bank’s loan exposure was to the now-bankrupt HDIL.

On September 30, ED filed a case under the Prevention of Money-Laundering Act (PMLA), alleging that HDIL, its directors and group companies had, in connivance with PMC Bank’s former managing director Joy Thomas and ex-chairperson Waryam Singh, illegally availed loans from PMC Bank between 2008 and 2019. These loans were not paid back, thus cheating the bank and its depositors.

According to the first information report (FIR) registered by EOW on September 30, the accused bank officials have admitted to not classifying loans on which HDIL had defaulted as non-performing assets. Investigations have revealed 44 suspicious loan accounts linked to HDIL. Using 20,149 fictitious bank accounts, whose individual balances were low, the bank covered up the HDIL group of companies defaulting on payments.

While the EOW is yet to file a charge sheet, its FIR names eight companies linked to HDIL with a total outstanding balance of Rs 4,355 crore in March. Of the 44 defaulting accounts, 10 belong to HDIL and companies linked to HDIL. One of the 10 accounts belongs to Rakesh Wadhawan and had an outstanding balance of Rs 2,008.62 crore on August 31, 2019. So far, ED has arrested the Wadhawans. EOW has arrested 12 accused in the case, including Wadhawans.