The size of the alleged Bhushan Steel fraud, which is currently tipped to be around Rs 2,000 crore, may jump to about Rs 6,000-7,000 crore.
Bhushan Steel, and its erstwhile promoters, have been previously accused of “siphoning off over Rs 2,000 crore” from loans availed by it “by using more than 80 companies”, according the Finance Ministry.
But a source close to the investigation said the SFIO has discovered a lot more illegal transactions than was previously thought.
It has discovered instances where money taken from banks was used to put down as promoter equity for further loans, fund purchases such as property and expensive cars, or outright take them out through more than hundred shell companies.
The SFIO is also probing certain cash payments the company had made, the source said.
The SFIO has arrested Neeraj Singhal, the erstwhile Promoter and Vice-Chairman of Bhushan Steel. This was the first arrest by the SFIO since it was given the power last year in fraud investigations.
The SFIO was in August 2017, granted the powers to arrest people for violations of companies law, with the government notifying relevant provisions amid the crackdown on illicit fund flows.
Bhushan Steel is one of the 12 big cases that had been referred for insolvency resolution by banks. The company was referred to the NCLT last year after accumulating over Rs 50,000 crore debt.
In May, Tata Steel completed the acquisition of Bhushan Steel after emerging the highest bidder. JSW Steel was the other interested company.
Tata Steel had complained about interference from Bhushan Steel promoters as it began the process of taking over the distressed assets.>