Rs 264 cr bank fraud: CBI raids home of ex-TDP MP

New Delhi: The CBI on Tuesday conducted searches at the residence of former Telugu Desam Party (TDP) Lok Sabha MP, Rayapati Sambasiva Rao in connection with a Rs 264 crore bank fraud case it has registered against him, his company Transstroy (India) Limited (TIL) and other directors of the company.

Officials here said that the raids were conducted at three locations in Hyderabad related to the company and its officials and one location in Guntur at Rao's residence, from where they have claimed to recover incriminating documents pertaining to the case.

According to the agency, the defaulting company had availed large credit facilities from a consortium of 14 banks, with Canara Bank as the lead bank, and then allegedly misappropriated and diverted the disbursed amounts for purposes other than ones declared. The complainant bank in the case has alleged a fraud of Rs 264.31 crore plus interest.

In fact, according to the complaint filed by Union Bank of India, the company had used Rs 5.28 crore of the loans sanctioned by the lending banks to purchase and donate a gold saree to the deity at a Tirupathi temple. The money was also used to pay for gold plating at the Srisailam Rudraksha Mandapam. According to a special audit commissioned by the complainant bank in the case, TIL had also written off Rs 794.16 crore and adjusted it against reserves and surplus, out of which Rs 719.36 crore worth of debt was hypothecated to the consortium banks and Rs 74.80 crore was from loans and advances.

Moreover, the audit found that Rs 200 crore worth of payments that the consortium banks had paid to the accused company's vendors was again routed back to the accounts of the defaulting company, shown as money received from promoters towards equity infusion. The company had explained saying it was a coincidence that promoters of the vendor companies had decided to invest in the company. In addition, Rs 15.24 crore was transferred to the accounts of Transstroy's Singapore subsidiary between 2013 and 2016, which was not the purpose of sanctioning the loans.

Interestingly, it was also revealed that Rao's TIL was a part of the Joint Venture Company that is in charge of the Polavaram dam project on the Godavari. According to independent site inspections conducted by the Bank of Baroda, a consortium member, it was found that the government was releasing funds to the JV Company through State Bank of Mysore, which has now been merged with State Bank of India, which is not a consortium bank.

Bank of Baroda's report from November 2016 claimed: "It is obvious that the Company has an intention to bypass the consortium banks and operating the account/s with other bank [sic] without obtaining the proper authorization from the JLF." The report went on to allege that this amounted to a criminal breach of trust and misappropriation of the receivables and book debts realised out of the Polavaram Project.

While the Central Bureau of Investigation has registered the case based on a complaint of fraud from Union Bank of India, the agency, in its FIR, has said that TIL had availed bank credit facilities from a consortium of 14 banks, all of which have declared the company's accounts as Non-Performing Asset (NPA) –meaning that further investigations might reveal a larger amount of fraud.

The CBI has also alleged that the company routed funds worth Rs 3,822 crore through non-consortium members, which violates the agreement between the lending banks and TIL. Rao and other directors of TIL have also been accused of manipulating stock receipts for the year 2016-17, showing stock receipts of Rs 2568.77 crore, when in fact purchases for the same period was only Rs 270.49 crore.