The Enforcement Directorate (ED) has unearthed one of the most elaborate banking frauds in recent years, involving alleged diversion and laundering of over Rs. 6,200 crore through a complex web of nearly 60 shell companies, many of which existed only on paper. The case highlights serious systemic lapses in bank lending and internal controls within public sector banks.
Mastermind and Modus Operandi
According to the ED’s investigation, the scheme was orchestrated by Sanjay Sureka, a Kolkata-based businessman, who allegedly created dozens of shell entities with the help of drivers, office assistants, junior staff, and relatives acting as nominal directors. These entities showed massive fictitious turnovers—primarily in iron and steel trading—without conducting any genuine business activity.
The shell firms were used to fabricate sales, purchases, transport records, and accounting entries, thereby presenting an illusion of a thriving industrial operation. In reality, investigators found that nearly 99% of the transactions were mere book entries, with no physical movement of goods or actual flow of money.
Role of Bank Officials Under Scanner
The ED has alleged that Sureka secured loans amounting to ₹6,200 crore from a consortium of government-owned banks, with critical assistance from S.K. Goel, the then Chairman and Managing Director of UCO Bank between 2007 and 2010. The loans were reportedly sanctioned without adequate collateral or due diligence.
Investigators noted a stark mismatch between the loan amounts and the underlying asset value. While loans exceeded ₹6,200 crore, the liquidation value of the borrower companies’ assets was estimated at around ₹600 crore, and actual asset sales yielded only ₹434 crore.
Concast Steel at the Centre of the Scam
The investigation identified Concast Steel & Power Ltd. (CSPL)—once a prominent iron and steel manufacturer with operations in West Bengal, Odisha, and Andhra Pradesh—as the epicentre of the fraud. CSPL was taken over by Sureka in 2008 and subsequently used as the principal vehicle to generate inflated turnover figures through transactions with associated shell companies.
Fake invoices, forged transport documents, and fabricated ledger entries were allegedly used to show continuous high-volume trading activity. ED officials stated that trucks were shown as carrying goods between factories and shell entities, despite no actual transportation or delivery taking place.
Laundering of Funds and Asset Trail
The ED further alleged that funds obtained through bank loans were laundered through the shell companies and used to acquire properties in the name of these entities for the benefit of bank officials. In what investigators describe as a quid pro quo arrangement, several assets were allegedly purchased on behalf of the former bank CMD and later transferred to his family members.
Following searches and arrests, the agency identified properties worth over ₹106 crore linked to family members and close associates, which have since been provisionally attached.
Arrests and Ongoing Probe
Sureka and his associates were arrested in December 2024 after the ED initiated a money laundering probe based on a CBI FIR. The investigation gained further momentum with the arrest of S.K. Goel on May 16 from his New Delhi residence.
Senior officials described the case as a “textbook example of systemic manipulation,” revealing how circular transactions, fake revenue generation, and institutional blind spots enabled the siphoning of public money on a massive scale.
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