BackBR Shetty accuses Indian banks of collusion in embezzlement of funds
Charges against Shetty, the founder of NMC Health, a healthcare provider in the United Arab Emirates (UAE), include under-reporting of debt and not using it for the purpose they were raised for
PremiumMUMBAI: Embattled billionaire B.R. Shetty has accused Bank of Baroda and Federal Bank of colluding with former executives from the Shetty group of companies who allegedly embezzled funds.
Filed with the Mangaluru East (Kadri) police station, the complaint has also been marked to institutions like Central Bureau of Investigation (CBI), Serious Fraud Investigation Office (SFIO), Enforcement Directorate (ED) and the Prime Minister’s Office (PMO), among others. Mint has seen a copy of the complaint.
Charges against Shetty, the founder of NMC Health, a healthcare provider in the United Arab Emirates (UAE), include under-reporting of debt and not using it for the purpose they were raised for. Shetty denied these charges in a statement released in April as well.
In his 55-page complaint on 6 October, Shetty has accused 10 individuals and institutions, including former executives Prasanth Manghat and Promoth Manghat, of financial fraud.
According to the complaint, the modus operandi of the Manghat brothers was to open multiple accounts in the name of group companies and open false accounts in Shetty’s name as well. They also used the “unbridled power vested in them" to withdraw corporate funds from the croup companies and transfer the same to their personal accounts, he said.
Shetty alleged that the brothers transferred corporate funds to other group companies, to present a stable financial picture, attempting to hide the “embezzlement and allowed them to obtain fresh loans which could be embezzled."
“Bank of Baroda permitted the Manghat brothers to open and maintain such false accounts, and carried out numerous transactions based on forged documents, at the behest of the Manghat brothers and their associates," the complaint alleged.
He said that by 2017, the Manghat brothers ‘deceptively’ took over the valuable properties or the group companies that he had established from 1973 valued in billions of dollars. From 2017 to 2020 the Manghat brothers and their associates, in collusion with the aforesaid banks, committed one of the largest corporate frauds in the history of the twenty first century, Shetty alleged in his complaint.
“Also, from 2017 to 2020, banks including the Bank of Baroda and Federal Bank- provided and kept evergreening loans, worth hundreds of crores, to the group companies, in violation of applicable guidelines and statutes, without creating any meaningful security and without enquiring about the end use of such loans," he said.
Shetty also alleged that banks accepted the security of personal guarantees bearing his forged signatures, even forging guarantees on days when it was physically impossible for him to execute any such document.
“Hence, these banks not only willingly acted as clearing banks for the proceeds of the crime committed by the Manghat brothers and their associates, but also provided them with funds that could be embezzled and/ or used to project a false financial picture," he said.
On actions taken by banks to bar him from selling some of his assets, Shetty alleged that banks are trying to usurp his personal properties to hide their collusion with the Manghat brothers, and to use his personal properties to project recoveries.
“I have lost investments worth billions of dollars in the said group companies, but far more importantly, my life's work of creating a robust enterprise which catered to critical needs of men and women has gone up in flames and my reputation, built over forty years of hard labour, lies in tatters," he said in the complaint.
Emails sent to Bank of Baroda and Federal Bank remained unanswered till the time of publication.
“This complaint is primarily against the Manghat brothers who have misused their position and Dr. Shetty’s trust by colluding with senior bank officials to launder millions of dollars. The investigation agencies will have to dig into these multiple transactions which is shocking and an outright theft," said Zulfiquar Memon, managing partner at MZM Legal LLP who is representing Shetty in the proceedings in India.
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