ED restores Rs 63 cr assets to SBI, UCO Bank in GS Oils fraud case

Hyderabad: In a significant step towards recovering public money lost to bank fraud, the Enforcement Directorate's Hyderabad unit has completed the restitution of attached assets worth nearly Rs 63 crore to two public sector banks, bringing partial relief to lenders hit by a major loan default.The restitution, carried out under the provisions of the Prevention of Money Laundering Act, involved the restoration of properties valued at about Rs 63 crore (value at the time of attachment) to State Bank of India (Rs 62 crore) and UCO Bank (Rs 75 lakh). These properties had been attached during the ED's probe into the GS Oils Limited case. Probe began in 2016ED initiated its investigation in 2016 against GS Oils, and others based on FIRs registered by the CBI, following complaints lodged by SBI and UCO Bank. The banks alleged that loans availed by the company turned non-performing assets due to non-repayment, causing a wrongful loss of Rs 274 crore to SBI and Rs 32 crore to UCO Bank. The probe revealed that GS Oils had availed multiple credit facilities from both banks, all of which eventually became NPAs due to fraudulent activities by the accused. ED investigators found that loan funds were round-tripped and parked in various associate companies before being withdrawn in cash or used to purchase land in the names of those entities. These properties were then mortgaged again to secure additional loans. LCs issued to shell firmsThe investigation also uncovered that large sums of bank funds were diverted through the fraudulent issuance of letters of credit to related shell firms for bogus supply of materials. These LCs were later devolved, and the funds were illegally routed back to the company's promoters, resulting in substantial losses to the public sector banks. To facilitate recovery, SBI and UCO Bank were pursued to file restitution applications under section 8(8) of the PMLA before the special PMLA court in Nampally. ED conveyed its concurrence for the restitution of the attached immovable properties so that the assets could be restored to the victims of the fraud. The special court allowed the restitution petitions filed by SBI and UCO Bank through orders passed in March and on Dec 17 respectively. These orders cleared the way for the restoration of attached assets, which include agricultural and industrial lands located in Adilabad, Asifabad and Mancherial districts of Telangana, as well as Wani in Maharashtra. Officials said the restitution exercise underscores the ED's focus on ensuring that proceeds of crime are returned to their rightful claimants and that public funds lost to financial fraud are recovered to the extent possible.