In a staggering case of financial deception, a Kolkata-based businessman, in collusion with a former top banker, orchestrated a fraud worth over Rs 6,200 crore against a consortium of public sector banks. The elaborate scheme involved creating a network of 60 shell companies with fictitious directors and generating thousands of crores in fake turnover for a non-existent iron and steel business.
The Masterminds and The Modus Operandi
The Enforcement Directorate (ED) has identified the key architect of the scam as Sanjay Sureka. He took over Concast Steel & Power Ltd (CSPL) in 2008, a company that once had operational plants across West Bengal, Odisha, and Andhra Pradesh. With the alleged assistance of S K Goel, who served as the Chairman and Managing Director (CMD) of Uco Bank between 2007 and 2010, Sureka executed a plan to siphon off massive loans.
The core of the fraud lay in creating a web of 60 shell entities. Shockingly, the directors of these companies were not seasoned executives but drivers, house-keeping staff, office boys, junior staff, and relatives. These companies existed only on paper, with no real business activity.
Using this network, CSPL engaged in circular transactions, pretending to buy and sell iron and steel products. The ED probe revealed a complete fabrication of documentation:
- Forged invoices and ledger entries.
- Fake transportation receipts showing movement of goods that never happened.
- No actual trucks moved, no goods were loaded, and no deliveries were made.
Remarkably, 99% of these transactions were mere book entries, with no real money flowing through the banking system. CSPL was essentially selling to itself, creating an illusion of a high-volume, profitable operation to justify continuous loan disbursements.
The Role of Banking Complicity and Money Laundering
The scam could not have succeeded without internal facilitation. The ED alleges that former Uco Bank CMD S K Goel played a crucial role in helping Sureka secure loans totaling Rs 6,200 crore, often without interest and penalty. In a quid pro quo arrangement, the proceeds of the crime were allegedly laundered back to Goel.
Funds were transferred to shell companies, which then purchased properties on behalf of the bank CMD. The ownership of these firms and assets was later transferred to Goel's family members. The ED has identified and attached properties worth over Rs 106 crore linked to his family and aides.
The unraveling of the scam began with the arrest of S K Goel by the ED on May 16 at his New Delhi residence. Subsequently, based on a CBI FIR, the agency initiated a money laundering probe, leading to the arrest of Sanjay Sureka and his associates in December 2024.
Massive Losses and a Systemic Failure
The financial devastation left in the wake of this fraud is monumental. The ED investigation report states that against the loans of over Rs 6,200 crore, the liquidation value of the company was a mere Rs 600 crore. So far, the sale of assets has realized only Rs 434 crore, indicating a catastrophic loss for the lending banks.
A senior official described it as a case study in manipulating the financial ecosystem. The scam exploited fake turnover, circular transactions, and systemic blind spots, ultimately defrauding public sector banks of more than Rs 6,210.7 crore, excluding interest.
The investigation highlights a profound failure in banking oversight. For several years, the entirely paper-based transactions, with no genuine cash flow, failed to raise alarms, and banks continued to lend. The probe report concludes that the scheme was designed to inflate working capital needs, manufacture expenses, and justify massive fund withdrawals, leaving the banks significantly poorer.
