Monday Post

Some interesting recent news item which I would like to share with you all.

You might remember few years back there was scam for almost Rs 25,000 Cr, in Maharshtra State Co Op Bank (MSC), where many politicians name were involved and the main name was of Pawar family, and when the scam happened Ajit Pawar was director of the said bank. After so many years of enquiry , as usual the Maharshtra Police gave clean chit to all the politicians and filed the closure report in the court.

Now  The Enforcement Directorate has challenged the Mumbai Police’s decision to file a closure report in the MSC Bank scam, in which 70 politicians from the state, including Nationalist Congress Party (NCP) chief Sharad Pawar, Ajit Pawar, and top Congress and Shiv Sena leaders had been named as accused. An ED official said, “Under the Prevention of Money Laundering Act (PMLA), a case requires a predicate offence. ED’s MSC bank case is based on the predicate offence registered by the Mumbai Police. Since the city police has closed its case, it might have a bearing on the ED’s investigation and therefore the central agency has moved the local court with an intervention application.”

The Mumbai Police, for its part, in the closure report, had said that there was no material evidence to prosecute the accused. The case is particularly significant as it had become an election issue in Maharashtra during assembly elections in 2019. Though Ajit Pawar had been made as an accused in the FIR, his uncle Sharad Pawar was not named in the case by the city police. However, the central agency has continued to probe in the case relating to money laundering. The ED’s case under PMLA is based on the original case filed by the Mumbai Police.

“It’s more a case of rules being circumvented. There is no material evidence to indicate any criminal misappropriation, conflict of interest or misuse of office,” the report quoted an official from Mumbai Police.

Of the 70 politicians accused in the case, 50 are from the NCP, nine from Congress, two from Shiv Sena and one from the BJP. Currently, Maharashtra is run by a tri party alliance of Shiv Sena, NCP and the Congress.

MSC Bank, the apex bank that controlled credit to the co-operative sector in the state and was handled by the ruling politicians, landed in trouble in 2011 after an inquiry report by NABARD (National Bank for Agriculture and Rural Development) found the bank was in red with a negative of Rs 144 crore. The report indicted the board of directors of the bank for financial mismanagement that led to a ballooning of non-performing assets. This was largely due to handing out of loans to sugar co-operatives and spinning mills in violation of all norms.

Secondly there was also mention of 5 defaulting Sugar Mills were sold  by the MSC Bank at throw away price, at the insistence of the politicians, whose names were listed in FIR. The suspected irregularities were in contravention of  the provision of The Securitisation and Reconstruction of the Financial Assets and Enforcement of Security Interest Act (SARFAESI). As per ED, during the sale the state co operative body defaulted the provision of SARFAESI act of 2002. The payment of their sale were not received within the stipulated period and in some cases it took more than 500 days to get the payment.
ED case was registered last year based on the FIR filed by Mumbai police, therefore they have the power to intervene in the matter as closure of the case, if accepted by the court, may influence the case being investigated under the PMLA. Some loan granted by bank during Jan 2007 to Dec 2007 are under ED’s scanner. ED had gathered various details and documents from MSC Bank and scrutinised the statutory report of NABARD, statement of several bank officials have been recorded by ED, which confirms the regularity committed by MSC Bank.

ED mentioned to court that they are also verifying if during the sale/auction, the entities’ reserve price were  decided on the basis of valuation by assessors but the same was not disclosed in the advertisement nor shown in the tender forms issued for submission of bids. So the offers amounts received were well below the  reserve price, leading to the sale of defaulting mills at throwaway price, ED further mentioned that it was required that the sale should have been conducted in transparent manner to maximise the sale price. ED is also verifying when the borrowers consent was obtained before selling below the reserve price. ED is also looking into whether Bank sanctioned the loan to entities with negative net worth.

With so  much irregularities under the scanner of ED, it was very surprising that  how could the Mumbai Police gave the clean chit to all the politicians, whose names were mentioned in the FIR. It to be seen what action court will take now. One thing has been proven again that the police is not free from political intervention , and they always are under the influence of politicians and it is immaterial politician belong to which political party. It is very rare that police take adverse action against any politician.

Waiting for your comments/views/feed backs.

Anil Malik

Mumbai, India

2^nd Nov 2020