Hundreds of crores diverted from Bhushan Steel, arm: Enforcement Directorate

The Enforcement Directorate (ED), which is probing money laundering charges over the alleged ₹47,000 crore bank fraud involving the erstwhile Bhushan Steel Ltd (BSL), has claimed that several hundreds of crores had been diverted from BSL and its subsidiary, Bhushan Energy Ltd.

This was submitted by the agency while seeking custodial interrogation of former BSL managing director Neeraj Singal. He was arrested on Friday and was remanded in ED's custody by a Delhi court till June 20.

Amid mounting debt and allegations of irregularities, BSL had gone into bankruptcy in 2017. Tata Steel acquired the company and the subsidiary out of bankruptcy and renamed it Tata Steel BSL. It has now been merged with Tata Steel.


According to ED's remand paper on Neeraj Singal, seen by ET, its probe had revealed evidence of round tripping of funds from BSL and Bhushan Energy "through multiple layers involving inter-company transactions". The money was then used for capital investment by their promoters/directors in various group companies including BSL, it claimed.

It said the "entire plan of mendacity was done by creating a complex web of intertwined transactions" among BSL, other group/associated companies and "other promoters/directors namely Brij Bhushan Singal (father of Neeraj Singal) and Ritu Singal (wife of Neeraj Singal)."

Funds totalling ₹1,375 crore had been remitted to BSL during financial year 2009-10 to 2014-15 by way of round tripping through multiple group or associated companies, the remand paper claimed, alleging that these transactions were sourced from the cash credit loan accounts of BSL. The roundtripped funds were parked in the bank accounts of the aforesaid directors from where the money was invested in BSL as either share capital or unsecured loans, it alleged.

Neeraj Singal, "in connivance with company officials, made fraudulent representations before the banks to discount LCs (letters of credit) and diverted funds back into his own companies for ulterior motives", the ED alleged.

Citing one such instance, the agency claimed that on March 7, 2014, BSL "fraudulently acquired" ₹25 crore from UCO Bank and routed the money through BSL and Bhushan Energy "to project redemption of preference shares worth ₹300 crore" in favour of BEL. "...at the same time, the funds were routed 12 times between three bank accounts to an aggregate loop of ₹900 crore," the remand paper alleged.

The shell companies used to divert funds were "managed and controlled" by Neeraj Singal, ED claimed.