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ED starts money-laundering probe against Sharad Pawar, Ajit Pawar

ED starts money-laundering probe against Sharad Pawar, Ajit Pawar

New Delhi: Two days after the Election Commission of India announced that Maharashtra will be going for polls in a month on October 21, the Enforcement Directorate has registered a money-laundering case against Nationalist Congress Party chief Sharad Pawar and his nephew Ajit Pawar, a former Deputy Chief Minister of the state, in connection with the Rs 25,000 crore Maharashtra State Cooperative Bank scam.

The financial probe agency filed an Enforcement Case Information Report (ECIR) - the agency's equivalent of an FIR - on Monday, naming a slew of NCP and Congress leaders, including the likes of Diliprao Deshmukh and Jayant Patil along with more than 60 people, who were holding executive positions at the bank at the time of the alleged scam.

The money-laundering case was registered after taking cognisance of an FIR filed by the Economic Offenses Wing of Mumbai Police in August this year on directions from the Bombay High Court.

While the Mumbai Police has not named Sharad Pawar in its case, the fact that the NCP chief's name appears in the ECIR means that he might be coming under the ED's scanner.

According to the ED's case, it is alleged that then top executives of the MSC Bank and office bearers and directors of Cooperative Sugar Factories, Soot Girnis and other processing units were granted exorbitant amounts of loans between 2007 and 2011 by the cooperative bank fraudulently, causing an undue loss of Rs 25,000 crore to the bank.

The ED has alleged that officials of the MSC Bank had sanctioned loans for top executives of the sugar factories they were "connected with" and that several irregularities were committed "only with the purpose of extending benefits to the Directors of the lending bank". The probe agency has also alleged that the loans were sanctioned to the sugar factories, despite weak financials and in some cases negative net worth. The scam came to light after a Public Interest Litigation with respect to the case was filed in January this year in the Bombay High Court, which then directed the EOW of Mumbai Police to register an FIR in the matter.

The ED has now said that MSC Bank had given out loans to the Cooperative Sugar Factories indiscriminately, simply based on 'connections' and after alleged mismanagement, under-utilisation of capacity and increasing overhead expenditure incurred by these sugar factories, they were sold through a board decision at throwaway prices to people with personal and political links to the board of directors.

Moreover, the consent of the borrowing units was also allegedly not taken before executing the sale of the sugar factories, which purportedly shows the "dishonest intentions on the part of Board of directors". The ED has also alleged that some of the sales had used forged sale certificates, showing a sale price much higher than the price the factories were actually sold for. The ED has further claimed that as part of this scam, the directors flouted various rules prescribed by the National Bank for Agriculture and Rural Development (NABARD) and the Reserve Bank of India, in addition to violating provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI Act).

Abhinay Lakshman

Abhinay Lakshman

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