While Vijay Mallya and Kingfisher Airlines continue to remain in the news over the alleged Rs 9,000 crore owed to public sector banks, not much has been heard about Rs 1.14 lakh crore of bad loans written off by 29 public sector banks involving numerous defaulters in the last three years between financial years 2013 and 2015, much more than they had done in the preceding nine years.
“I have for reference one case in which it is revealed beyond doubt that the RBI [Reserve Bank of India] as also the government and its extended arms like the CBI [Central Bureau of Investigation] and CVC [Central Vigilance Commission] are busy in hushing up the fraud perpetrated by one corporate M/s Siddhi Vinayak Logistics Ltd and through its group companies from Surat for an amount of Rs 1,045 crore.”
While Singh’s letter goes on to make various other allegations, the most sensational happens to be a letter attached as Annexure 9, purportedly written by “RC Baids”, "Founder, Siddhi Vinayak Logistics Limited” on September 16, 2014 to Bank of Maharashtra, Pune:
The letter reads:
Today, we are truly grateful to have been associated with you and extremely grateful for your support for standing by us in all times.
We feel extremely proud to bring to your notice the support extended to us by our honorable Prime Minister Shri Narendra Modiji, for our initiative of Driver’s Day, a day that we initiated to appreciate the contribution of Drivers to our life and the Indian Economy.
The message, purported to be from the prime minister in Hindi, which is enclosed, says:
It is a matter of great pleasure that Siddhi Vinayak Logistic Limited is celebrating 17 September 2014 as Driver’s Day. This step to recognise drivers’ contributions is commendable.
As Annexure 8 is attached to an earlier letter dated June 11, 2014, this one purportedly carrying the signature of Roop Chand Baid, explains the delay in repaying the loan amount. This letter is addressed to the Assistant General Manager, Bank of Maharashtra, Deccan Gymkhana Branch, Pune.
“Before that undersigned was busy with preparation of very specialised vehicles for 3D campaigning by Hon. Shri. Narendrabhai Modi (Now Hon. Prime Minister of India) & his team. It took about 2 months (February & March). During this period, I couldn’t attend business work.”
Baid's reference seems to be to the specially designed trucks with screens and projectors that helped Modi address rallies simultaneously in several parts of the country through his 3D hologram during the 2014 Lok Sabha campaign. The 3D campaign, which was the first of its kind in the Lok Sabha elections (though Modi had used it during the Gujarat Assembly polls of 2012 as well), created a lot of buzz among electorates and is said to have played an important role in catapulting the BJP leader to the country’s top post.
It should be noted, however, that the above are shown to be purported letters by Baid (or in one case Baids) in an attempt to flaunt his (real or perceived or exaggerated) proximity to the prime minister, and there is no evidence of any pressure on the part of the prime minister to influence the bank.
RC Baid and SLVV did not respond to our emails asking for confirmation about the above email messages seeking to know the relevance of mentioning the name of the prime minister and including his message in their correspondence with Bank of Maharashtra.
The loan agreement
In 2012, SVLL, which is headquartered in Surat launched its corporate social responsibility scheme "Chalak se Malak" (from driver to owner), took loans from Bank of Maharashtra, claiming that it wished "to reward the loyalty of hundreds of truck drivers employed" with the company.
SVLL proposed to sell "its used trucks to the drivers at mutually agreed fair prices based on valuation."
As per the portfolio documents with the Bank of Maharashtra dated December 31, 2012, the drivers were to operate the trucks as their own, but continue to have them deployed with SVLL as sub-contractors.
Out of the bills payable to the driver-cum-owner, SVLL said it would deduct instalments "on account of price of the truck. On full payment, the truck would be transferred in the name of the driver."
SVLL promised to pay these instalments to Bank of Maharashtra, which evidently were not paid. By May 2014, the bank had direct exposure to the group companies of SVLL of Rs 259 crore, and its indirect exposure to the group by way of Small Road Transport Operator finances were Rs 645 crore, according to a report by India Today, dated March 17, 2015.
The Pune branches of the Bank of Maharashtra played a major role. Specifically, one indirect term loan to drivers was given from Model Colony Branch, Pune, to 500 accounts of Rs.100 crore, and another indirect term loan to various drivers was given from Deccan Gymkhana, Pune, to 2,375 accounts of Rs 652 crore.
The same publication then reported that the bank had issued an "order of suspension against three senior officials who were involved in sanctioning a loan worth Rs 600-700 crore to SVLL, violating banking guidelines."
1) PN Deshpande, General Manager with present portfolio of Resource Planning, Government Business, Marketing & Publicity, ABC, CPIO and SLBC.
2) Rajesh M Jain, Assistant General Manager, Asset Recovery Branch, Kolkata.
3) AM Menon, Assistant General Manager at Amravati Branch, Maharashtra.
All three officials were to remain under suspension till the Bank concluded its internal investigation.
The bank also filed a complaint with the CBI in April 2015 and the case was registered three months later, in August. “But despite the lapse of almost a year, no visible progress has been made in the case even as both the CBI and the bank have enough actionable material in the form of evidences against the SVLL,” a senior official with Bank of Maharashtra's Integrated Risk Management Department told Scroll.
On April 20, 2016, the Hindu reported:
Though SVLL now features in the bank’s list of wilful defaulters uploaded on its official website, two of the three officers who were suspended in connection with the case, have been reinstated.
A whistleblower in the bank informed The Hindu the officers were reinstated even as the inquiry initiated by the Central Bureau of Investigation (CBI) is still on and the forensic audit report has exposed the scale of the scam. A forensic audit is an examination and evaluation of a firm's or individual's financial information for use as evidence in court and can be conducted to prosecute a party for fraud or embezzlement.
The Hindu report also provided details of the confidential report that was presented to the audit committee of the Bank of Maharashtra board in September 2015 but was not made public.
According to the report – which is part of the ongoing CBI investigation in this financial fraud case:
Rs 629.84 crore out of the total loan disbursed – Rs 933.25 crore – was misutilised. Of this, there was no money trail for Rs 339.29 crore in the absence of adequate data/ statement from SVLL.
The audit report also observed that same vehicles were offered as security for term loan and old trucks under Chalak se Malak scheme.
The Hindu report quoted a whistleblower who shared the document with the paper as asking the bank management to explain the reasons behind this leniency to SVLL.
“Is it because of the political support it has from Gujarat, which was seen through the letters of SVLL? Why should public money be wasted on such companies?” the whistleblower asked.
The Bank of Maharashtra did not respond to Scroll's emails.
Singh's letter to Jaitley, however, went on to make serious allegations. It alleged that PN Deshpande, who had been suspended once the scam was detected, was reinstated on April 11, 2016 “at the behest of Banking Department which means Central Government”.
Singh also said that Deshpande was on the Bank of Maharashtra's Board of Directors representing the bank’s officers’ union affiliated to Bharatiya Mazdoor Sangh, “which acts as extended hand of the ruling party in trade union field”.
"All those circumstantial evidence are sufficient to prove that the government has shown special interest in dealing with the case so as to protect the officials concerned since they have obliged the corporate, one who has obliged the party in elections."