The Economic Offences Wing (EOW) of Pune Police on Wednesday arrested Ravindra P Marathe, Managing Director (MD) and Chief Executive (CEO) of Bank of Maharashtra along with five others in the multi-crore DS Kulkarni default case. Those arrested include the Bank’s former Chairman and MD Sushil Munhot, Executive Director Rajendra K Gupta, Zonal manager Nityanand Deshpande as well Sunil Ghatpande, Chartered Accountant (CA) of DSK Group and Rajiv Newaskar, Vice President in DSK.
Pune based RTI activist Vijay Kumbhar, who has also been person instrumental in unearthing the DSK defaults says, “The officers of Bank of Maharashtra colluded with DSK Developers Ltd (DSKDL) and misused their power and authority possessing a dishonest and fraudulent intention to sanction and disbursed the amount of Bank under the garb of loan which was siphoned off.”
Following the arrests, the Bombay Stock Exchanges has sought a clarification from Bank of Maharashtra.
Marathe has been arrested for allegedly misusing his powers to sanction huge amounts of loans to shell companies.
It is alleged that BoM sanctioned loans illegally and despite knowing many irregularities. Pre and post disbursement precaution were not maintained. This was done despite knowing that the borrower was not using the loan amount for the purpose that sanctioned by the bank. One of such loan was sanctioned for ‘to meet temporary mismatch in cash flows”.
According to the investigators, the bank executive and officials colluded with the DSK Group "with dishonest and fraudulent intentions to sanction and disburse the amount of the bank (BoM)" under the garb of loans and the money was later siphoned off.
All the arrested accused have been charged under various provisions of the Prevention of Corruption Act and other laws pertaining to cheating, forgery, criminal conspiracy and breach of trust.
During this process, the notifications, guidelines of Reserve bank of India (RBI), which are applicable to all banks were not considered and the funds of the public bodies were utilised as if they were private funds. The transactions to siphon of this money were conducted in an illegitimate manner.
The National Stock Exchange (NSE) and BSE have already suspended trading of DSKDL following an order from National Companies Law Tribunal (NCLT) owing to DSKDL’s non-compliance of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and penal reasons.
Pune-based DSK Group's owners DS Kulkarni and his wife Hemanti were arrested in February on charges of cheating over 4,000 investors of over Rs1,150 crore and diverting bank loans of nearly Rs2,900 crore.
As a follow-up in the case, last month, the Maharashtra government had ordered attachment of more than 120 properties, 275 bank accounts and four dozen vehicles belonging to the owners and the company invoking the provisions of Maharashtra Protection of Interests of Depositors Act, 1999.
You may also wish to read earlier news coverage in #DSK Default series…