Exclusive: Fugitive Sandesara of Sterling Biotech Dictates Terms to Indian Public Sector Banks
Remember the four politically powerful promoters of the Sterling Biotech group (Nitin Sandesara, Chetankumar Sandesara, Dipti Chetan Sandesara—and Hiteshkumar Patel) who have been absconding from India after running up Rs15,600+ crore of bad loans? They continue to manipulate the judicial system, string banks along and, now, have come up with a proposal to delay their one-time settlement (OTS) of Rs2,638 crore to December 2021.
 
This is the balance after paying up a pittance of Rs181 crore as part of their Rs3,100 crore settlement that the National Company Law Appellate Tribunal (NCALT) had said should be completed by 31 March 2020 to avoid liquidation. Why are these Gujarat-based promoters treated so differently from all other borrowers who have faced traumatic losses in the COVID lock-down? And why the sharp contrast from liquor baron Vijay Mallya who has offered full repayment with interest, or even from small borrowers who want the moratorium on their bike loan extended?
 
Without holding any brief for Mr Mallya, who thought he could get away with loan defaults and manipulate the system, it is worth comparing the two situations. 
 
Bankers, who do not even respond to Mr Mallya’s offers, invite fugitive Nitin Sandesara to an online meeting on 3 July 2020 where he renegotiates OTS terms, already approved by the NCLAT. He proposes a shocking one-year delay in payment to December 2021 and still won’t reveal the source of money, other than a vague assurance that it is not fruit of a crime.
 
Moneylife has accessed a letter of Nitin Sandesara to Union Bank of India, dated 16 July 2020 where he outlines why he wants to delay payment that had to be made on 31 March 2020 plus 30 days. 
 
The suspected collusion by the bank consortium is evident even in long delay in sanctioning the OTS. While some members of the consortium sanctioned it in 2018-19 when Mr Sandesara began his dubious negotiation from hiding, a few sanctioned it only in February 2020. So Mr Sandesara wants to wangle at least six months’ time from the last sanction, plus use the excuse of a COVID-related business disruption which is not available to law-abiding, taxpaying Indians. 
 
His letter (posted below), shows that the Sterling group has also approached the Supreme Court to buy more time to make the payment, and this is also being used to his advantage. He writes that things will return to normalcy by the end of this year and his mystery investor will pay up the balance 90% of the OTS (Rs2,638 crore) only in December 2021. 
 
Meanwhile, he offers a few more crumbs to banks that only offer evidence of the special treatment to the group. First, he asks banks to distribute his two-tranche payment of Rs204 crore among themselves and then divvy up another Rs120 crore lying in a current account of Andhra Bank among themselves keeping a sum of Rs10 crore as cash balance. Why has the money not already been appropriated by banks and is still lying untouched for him to offer up years after absconding? 
 
Mr Sandesara also wants Sterling Biotech out of the purview of the resolution professional so that it can be run more professionally under ‘bank management’ and generate positive cash-flows. Since banks do not run companies, it probably means that Mr Sandesara will be running Sterling Biotech by proxy with tacit approval of the banks. Also, if he is so confident it will generate a ‘cash surplus of Rs40 crore each month’ amounting to ‘an auto recovery of Rs480 crore a year’, why did he flee India with family after a group default of over Rs15,600 crore? 
 
Another scandalous detail that he mentions is that the liquidators are allegedly ‘pursuing their own interest’ and have put the liquidation value of this company at just Rs300 crore. Isn’t this astonishing? A company that can ‘auto generate’ Rs480 crore a year with a small tweak in management—according to Nitin Sandesara—cannot find bidders who will pay more than Rs300 crore as liquidation value? Are potential bidders scared to bid? Surely, bankers who lend massive sums to the group are aware of what is going on.
 
Mr Sandesara ends by asking the banks’ support to help clear his name by paying the “full amount, which is the 100% book overdue on the date of NPA of the bank.” This is dubious word play. Sterling Biotech alone owed Rs8,100 crore to banks and is paying back only 65%. The group owes Rs15,600 crore to financial creditors, much of which will be written off without proper recovery effort, as we will see later. 
 
Mr Sandesara’s letter notes that banks will not even get 15% of the money, if they do not accept his deal. This again is false, since banks are making no effort to follow up on his profitable oil business in Nigeria and the money trail to the US, even though they have secured those dues and have a legal case to make. The worry is that the Sterling OTS will open the doors to other fugitive industrialists of companies like Gitanjali Gems, Winsome Diamonds, etc, who are not being pursued anymore. 
 
Remember, the Sterling group is under investigation by the Central Bureau of Investigation (CBI), enforcement directorate (ED) and the serious frauds investigation office (SFIO) for fraud and money laundering. And, yet, the absconding promoter is instructing banks about tiny sums of money in his companies as though it is business as usual. It will be instructive to see whether banks treat small and medium borrowers, whose businesses have been destroyed by COVID, with similar kindness. 
 
Our national investigation agencies also seem to be watching from the sidelines.  SFIO, I learn, has recently started gathering details about Sandesara group companies but ignores action against their Nigerian operations and the money trail to the US that was published by us. 
 
 
Meanwhile, individuals such as Captain Sukhpal Singh, with experience in maritime and oil industries, are doggedly pursuing the Sterling case through applications under the Right to Information (RTI) Act. In a letter to finance minister (FM) Nirmala Sitharaman dated 2 May 2020, Captain Sukhpal Singh alleges that Indian banks, “despite having first ranking charge on the present and future movable and immovable assets of SEEPCO (Sterling Oil Exploration & Energy Production Company Ltd), Nigeria, are not taking any steps to implement their rights over these assets.” The global companies of the group include: Sterling Global Oil Resources Pvt Ltd Mauritius (SGORPL), Sterling Biotech Limited (SBL), Sterling SEZ & Infrastructure Limited (SSEZ), Sterling Port Limited (SPL) and PMT Machines Limited (PMT), and banks had, in the past, extracted some hold over their resources for failure to pay Indian loans.
 
 
Captain Singh has also written to the governor of the Reserve Bank of India (RBI), Shaktikanta Das, and every bank chairman in the consortium. So they cannot pretend not to have heard from this whistleblower.
 
Captain Sukhpal believes there is a lot that Indian banks can do to recover their money, instead of pretending they will get only Rs300 crore, if they do not accept Mr Sandesara’s deal. The Nigerian companies are doing well and Indian banks have legal rights over their assets and can even seize consignments ‘at the place of discharge’. Then, why aren’t banks acting to protect their interests? There is no mention of this in the discussion with Mr Sandesara. 
 
Are banks pursuing their own dubious agenda or are there political forces that are working at facilitating the re-entry of the Sandesaras into India as legitimate industrialists? 
 

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    COMMENTS

    kiranshah254

    7 months ago

    Even God can not save PSU banks. This fraud is going on most PSU banks. One more Q. is that BJP honchoes may be hands-in gloves with Sandesaras but Why Congress & RG are silent ? Most of their agendas are phoney & the grass root workers in Congress & the common citizenry do'nt understand their moves at all.

    Newme

    7 months ago

    India is run Banias and Brahmins. No one can take action against these two.
    IL&FS Parthasarathy is comfortably settled in USA after looting 1 lakh crores.

    s5rwav

    7 months ago

    Empowered Judges of India sitting at High Courts and Supreme Court of India seem Comfortable with Loot of Public Money of Thousands of Crores and also seem least interested in Criminal Prosecution of the Culprits like Sandesaras and Kamath and Kochhars. I am Babubhai Vaghela from Ahmedabad. Thanks.....

    Meenal Mamdani

    7 months ago

    Looks like the mafia from Gujarat is getting cover from politicians from Gujarat. Who are these high level Gujarati politicians? Sounds like corruption, doesn't it? Wasn't BJP saying that Congress is corrupt? Not a word from BJP now their members are feeding at the trough.

    AJ_AJ

    7 months ago

    What exactly is the link between the Sterling group and politicians?

    sundar_ramang

    7 months ago

    Great article as usual by Sucheta Dalal..I doubt if India will ever improve in my lifetime..Corruption is all pervasive..

    mahesh.kalkar

    7 months ago

    Moneylife continues to do great service.

    Both BJP & Congress support this absconding group, it appears

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