New Delhi: Pramod Kumar Mittal, a former chairman of Global Steel Holdings Ltd, has been booked by the Central Bureau of Investigation (CBI) for alleged default on credit repayments to the State Trading Corp. causing an estimated loss of Rs2,112 crore to it.
CBI in its 19-page FIR has also named Lalit Sehgal, former chief executive officer of Global Steel Philippines Inc. and 18 other accused including former chairman and managing director of the STC Arvind Padalai and 18 former executives of the PSU.
Global Steel Holdings, which was set up in tax haven Isle of Man, and Global Steel Philippines Inc., have also been named as accused in the FIR which is registered for charges of criminal conspiracy, cheating and corruption. No reaction was immediately available from Mittal or any of the companies mentioned in the FIR.
It is alleged that Global Steel Holdings had approached STC in 2003 seeking assistance in financing facility by issuing Letters of Credit for purchasing raw materials required for their newly acquired steel plants in the Philippines and Bosnia. The STC sent a communication to Indian ambassador in the Philippines seeking feedback about the constitution of the company, strength of assets, investment climate to which he responded that the embassy was not in a position to provide such details and advised to carry out further inquiries to protect its interests, the FIR alleged.
The STC guidelines mandated to get a credit rating done in such cases from specialised agencies but no report regarding financial health of the company and associates was obtained despite the suggestion of the Ambassador, it alleged. “From the initial stage, STC was exposed to financial risk and undue favour was shown to the associate by them," it said.
The FIR alleged Pandalai, the then Chairman STC, asked his officials to place the GSHL proposal before the board. The officials did not apprise the board that RBI guidelines barred suppliers’ or buyers’ credit for merchanting or intermediate trade transactions, it alleged. The board had given ‘in-principle’ approval to third country transactions along authorised the CMD to exercise all powers for smooth implementation of the project.