Bank fraud: ED arrests Shakti Bhog CMD in money laundering case

New Delhi: The ED on Monday said it has arrested Kewal Krishan Kumar, chairman and managing director (CMD) of Delhi-based Shakti Bhog Foods Limited, in a money laundering case linked to an alleged multi-crore bank loan fraud.

Kumar was arrested on Sunday here and later produced before a special Prevention of Money Laundering Act (PMLA) court that sent him to ED custody till July 9, the federal investigative agency said in a statement.

The agency, prior to the arrest, also raided at least nine premises in Delhi and Haryana.

"During the searches, various incriminating documents and digital evidences have been recovered," it said.

The ED case filed under criminal sections of the PMLA is based on a CBI FIR that was filed early this year against Shakti Bhog Foods Limited for an alleged fraud of Rs 3,269 crore on a consortium of 10 banks led by the State Bank of India (SBI).

The CBI complaint came after the SBI registered a complaint against the company.

According to the SBI, the directors allegedly falsified accounts and forged documents to siphon off public funds.

The 24-year-old company, which is into manufacturing and selling wheat, flour, rice, biscuits, cookies etc., had grown organically as it ventured into food-related diversification over a decade with a turnover growth of Rs 1,411 crore in 2008 to Rs 6,000 crore in 2014, the bank had said.

The ED said the "allegations against the accused include diversion of funds from loan accounts by round-tripping through related entities and siphoning of funds was being done by way of

suspicious sale/purchase from various entities."

The bank report to the CBI said the turnover growth of the company came to an abrupt halt in 2015 with the account turning into a Non-Performing Asset (NPA) and it was ultimately declared a fraud in 2019.