ED case against Pawars in state co-op bank fraud

The Enforcement Directorate (ED) has registered an Enforcement Case Information Report (ECIR) in connection with an alleged ₹25,000-crore Maharashtra State Co-operative

The Enforcement Directorate (ED) has registered an Enforcement Case Information Report (ECIR) in connection with an alleged ₹25,000-crore Maharashtra State Co-operative (MSC) bank fraud case against Nationalist Congress Party (NCP) chief Sharad Pawar, his nephew and former deputy chief minister Ajit Pawar, along with leaders from various parties.

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The ECIR, equivalent to a police FIR, has been registered by the Central agency under the Prevention of Money Laundering Act (PMLA).

The case pertains to loans to co-operative sugar factories (CSFs), spinning mills and other processing units. It is alleged that top executives and office bearers were given loans in a fraudulent manner. Most of the 48 directors of the MSC bank at the time when the alleged fraud was committed between 2001 and 2011, were elected representatives from various parties, including Ajit Pawar.

Meanwhile, Sharad Pawar said no case has been filed against him and that he has never been director of any of the banks.

“I was never director of any co-op bank. I was never part of any process or decision to give loans. If ED or Maharashtra government has decided to file a case against me, I thank them. I am not even a member and was never part of any process. Banks often give financial support to troubled co-operative institutions. It is not a crime. I welcome the action. I got tremendous response from the people when I recently travelled across the state. I would have surprised had the ED not acted against me,” Pawar said. Despite repeated attempts, Ajit Pawar was unavailable for a comment. Patil said the case is an attempt to scare Congress and NCP, ahead of the state elections.

“Pawar has never had a position at the MSC bank, neither has he written any letter for sanctioning loans to anyone. Despite that, he has been booked by the ED. This is absolutely condemnable,” Patil said.

Meanwhile, ED will be probing the alleged money-laundering in the case. The loans sanctioned are suspected to have been done only to extend benefits to the directors of the lending bank, for personal gains, thereby defrauding and cheating the bank and its shareholders.

The agency will probe loans sanctioned to CSFs despite having weak financials and negative net worth and in many cases, no collateral was taken, which was done on the basis of fraudulent and dishonest representation of bank.

Subsequently, the CSFs were sold after a decision taken by the board of directors at a price much below the reserve price to avail wrongful gain to the purchaser. The CSFs were sold as they went sick owing to alleged mismanagement.

The agency will probe why the CSFs were sold at a price much lower than the reserve price, rules flouted to fix the reserve price over allegations that it was fixed on basis of the interest of the purchases, forged documents like sale certificates were made in some instances in which the actual sale was done at a much lower level than mentioned in sale certificates.

The Bombay high court (HC) in August this year had directed the Economic Offences Wing (EOW) of the Mumbai Police to register a first-information report (FIR) in the case. The HC issued the directive on a public interest litigation (PIL) filed by activist Surinder Mohan Arora, who alleged lack of action by the police on his complaint regarding the fraud.

The 57-year-old Andheri resident sought action against the political leaders and bank officials on the basis of a 2011 National Bank for Agriculture and Rural Development (NABARD) inspection report and reports of inquiry under provisions of the Maharashtra Co-operative Societies Act, 1960. Both reports had disclosed rampant malpractices in loans disbursed by MSC Bank and consequent loss of crores of rupees.