HomeBUSINESSNew fraud allegations against Srei

New fraud allegations against Srei


MUMBAI : More trouble is brewing for Kolkata-based Srei Group, with the Reserve Bank of India-appointed administrator reporting instances of fresh fraudulent transactions. Two people aware of the matter said more skeletons are likely to tumble out of the cupboard.

In June and July, Rajneesh Sharma, the administrator had reported frauds worth 3,025 crore and 2,134 crore, respectively. Last week’s disclosure has taken the aggregate fraud amount to 5,396 crore. BDO India LLP is auditing the group’s financial transactions as part of the resolution process.

On 6 August, the auditor informed the Kolkata bench of the National Company Law Tribunal (NCLT) about the fresh frauds under Sections 60(5) and 66 of the Insolvency and Bankruptcy Code (IBC) involving Ashwath Quippo Infraprojects Pvt. Ltd, which offers urban water and sewage infrastructure solutions, and Srei group founders Hemant and Sunil Kanoria. Details of the findings were disclosed in a regulatory filing on Wednesday.

“The impact of the transactions, excluding interest payment calculations, amounts to around 236.86 crore,” it said in the filing. The alleged fraud was part of loan disbursements and debt recast of Ashwath Quippo’s accounts by Srei Equipment Finance Co. under its erstwhile management between FY19 and FY22.

This is the fifth application filed by the administrator before the NCLT since the first case of fraud was reported on 13 June.

“There are more in the pipeline and the legal team is going through them to ascertain if they can be included in future applications to the NCLT. The team is expected to make headway in a couple of days,” said one of people cited above, requesting anonymity.

Only those alleged fraudulent transactions that the legal advisors feel will stand scrutiny in the tribunal will be referred, he added. “The exercise will allow potential investors to get a clean balance sheet, and will not have to worry about suspect transactions coming to bite them later,” he said.

Financial creditors of the two group companies, Srei Equipment Finance and Srei Infrastructure Finance, have an exposure of 32,750 crore, according to claims as on 30 July. Canara Bank has an exposure of 3,470 crore, followed by Union Bank of India ( 2,935 crore), Punjab National Bank ( 2,934 crore) and State Bank of India ( 2,808 crore).

Last October, RBI had superseded the boards of the two group companies and appointed Sharma, a former Bank of Baroda executive, as the administrator, before referring the case to NCLT.

On 15 June, Mint reported that the legal team working on the insolvency resolution of the Srei group expects to unearth more frauds.

The insolvency resolution process involves audits where thousands of debtor’s transactions are examined to spot inconsistencies. In the Dewan Housing Finance Corp. Ltd (DHFL) case, the first non-bank financier to be referred to the insolvency tribunal, and later acquired by Piramal Group, the administrator had filed a case of fraud worth 12,705 crore in September 2020 and another 6,182 crore in February 2021, VCCircle had reported.

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