ED arrests Zoom Developers promoter for defaulting on Rs 3,000 crore bank loans

Mangalore Today News Network

Mumbai, May 03, 2017 : The Enforcement Directorate on Wednesday arrested Vijay Choudhary, the promoter and director of Zoom Developers Pvt Ltd, one of the top wilful defaulters in the country that owes about Rs 3,000 crore to at least 26 banks. The agency has arrested Choudhary under section 19 of the Prevention of Money Laundering Act (PMLA).

 

“The money laundering investigation was conducted in this case on the basis of FIR/chargesheets filed by the CBI, New Delhi wherein it is alleged that Vijay Choudhary controlled Zoom Developers has caused wrongful loss to the 5 banks viz. Punjab National Bank, Syndicate Bank, Canara Bank, United Bank of India and Union Bank to the tune of Rs 966 crore. Further, this loss is not just limited to Rs 966 crore but the accused has cheated more than 25 Banks and it involves huge public money over Rs 2,650 crores,” said ED in a statement.

According to the ED probe, Choudhary formed two trusts — Beverin Stifung Foundation and Windleaf Foundation in Liechtenstein where he was the sole beneficiary. Subsequently, Choudhary formed five companies under these trusts in the UK and Switzerland. These five foreign firms including Astikor AG, Llondenium Trading Ltd. entered into contracts and sub-contracts for rendering of engineering services with Zoom Developers as independent firms. Zoom Developers on the basis of these contracts approached various Indian Banks for bank guarantees and counter-guarantees to the foreign bankers of the aggregators.

The money raised through guarantees was “utilized by Zoom Developers among their group companies, as investment in share capital for purchase of properties” among others.

“It is observed that majority of the contracts are paper-contracts only (i.e., no physical work/services/supply was ever made against them) and no work was done, Zoom Developers has frequently sought extension of Bank Guarantees/ Counter Guarantees, issued by their Indian bankers, submitting false grounds for extension,” said the ED statement.

Several lenders had issued bank guarantees to the company allegedly without due diligence and allowed it to roll over bank guarantees for four years until 2009-10, according to sources familiar with the case. While the value of bank guarantees was Rs 3,000 crore, the collateral with them was only Rs 150 crore, they said.

Zoom Developers’ main business was scrapping a plant and then relocating it. In 2004-05, sources said, the company decided to use five aggregators, mostly from Europe, to get international orders. In this context, aggregators are entities that secure job contracts for a third party.

Zoom used to sign contracts with these aggregators to execute projects for third parties. The aggregators would make advance payments to Zoom and secure this with a bank guarantee from an Indian bank for an equal amount, said sources.

“Vijay Choudhary was the mastermind behind this and with the help of Sharad Kabra, a chartered accountant and others have evolved this novel modus operandi, cheated the Indian Bankers, siphoned off the public funds outside the Country, and acquired properties/assets, by way of laundering the illegally generated money through web of companies created in India,” the ED said.

According to the ED, Choudhary has formed about 485 companies in the name of his family and employees. He also 15 companies in USA, three in UK, three in Switzerland, seven in Singapore, four in Germany, nine in UAE, and two each in China and Zimbabwe. The ED has alleged that Choudhary formed these foreign firms “for the sole purpose of laundering the proceeds of crime”.

So far the ED has attached assets worth Rs 130 crore of Zoom Developers including a 1280 acre land in California in the US.

Courtesy:IndianExpress