Rs 6,200-Crore Loan Scam: Kolkata Businessman Defrauds PSU Banks With Web Of 60 Shell Companies

A Kolkata-based businessman has defrauded several state-owned lenders of Rs 6,200 crore by weaving a web of 60 shell companies with the head of one of the leading banks playing as an accomplice in the loan scam, according to a report by The Times of India.

The fraud process involved drivers, house-keeping staff, office boys, junior staff and relatives of the industrialist acting as "directors" of a fictitious empire allegedly worth a turnover of thousands of crores in iron and steel manufacturing.

However, this 'empire' was all on paper with no real business activity involved. The scam was scripted by Sanjay Sureka, the businessman who created dozens of shell entities and with the help of S K Goel, the then chairperson and managing director of UCO Bank, managed to get loans of Rs 6,200 crore.

According to TOI, the Enforcement Directorate was quoted saying in its investigative report, "Against loans of over Rs 6,200 crore, the company's liquidation value barely reached Rs 600 crore, and assets sold so far have realised only Rs 434 crore.''

Goel was arrested by the ED on May 16 at his residence in New Delhi. The regulatory watchdog later identified properties worth over Rs 106 crore associated with family members and aides and attached them. Sureka and his associates were arrested in December 2024, as ED probed money laundering based on a CBI FIR.

At the centre of this scam was Concast Steel & Power Ltd, once a flagship iron and steel group with plants across West Bengal, Odisha and Andhra Pradesh that was taken over by Sureka in 2008, as per the ED.

Surekha conjured up shell entities and with the help of UCO Bank's Goel, managed to get a total of Rs 6,200 crore in loans without interest and penalty. This money was laundered by the accused and quid pro quo to Goel was transferred in the name of the shell companies. These shell firms purchased properties on Goel's behalf. The ownership of these companies was later transferred to Goel's family members.

Goel served as the chairperson and MD of UCO Bank between 2007 and 2010. "It is a case study in how an entire financial ecosystem can be manipulated through fake turnover, circular transactions and system-wide blind spots, ultimately leaving public sector banks poorer by more than Rs 6,210.7 crore, excluding interest," said a senior official in the report.

In its investigation, the ED unearthed fake sales, purchases and transport billings where CSPL pretended to buy and sell iron and steel products with associated entities, backed by forged invoices, ledger entries, transport documents. The probe found that neither sale proceeds nor payments for purchases were made through banks and transactions were merely book entries.

Yet, during the entire scam operation lasted several years, it did not raise any alarm bells in the banks, which continued lending. This meant that Concast was essentially selling to itself and then realising these payments through accounting fiction, according to the ED's investigation.

By 2017, nearly 99% of all sales to the entities were settled through book adjustments and no money was returned to banks. Over 50% of all raw material sourcing came from the web of related-party entities and 90% of payments to these "suppliers" were made through internal adjustments with no real cash outflow.