Sterling Biotech Bank Fraud: A Deep Dive Into The Scams Perpetrated By The Bankrupt and Absconding Defaulters


Scams, frauds, bankruptcy and absconding defaulters – these words are seen in such regular instances in the present decade. At the end we as common people think that the banks will suffer the losses. But we don’t realise that the bank is just an intermediary. That money is one way or other, common public’s hard earned savings. And it will also be compensated from tax paying salaried middle class. Just like one of the many scams is the STERLING BIOTECH defaulters who ran away to hide in Nigeria.

Let’s take a look at what’s happening with sterling biotech in its bankruptcy proceedings. These promoters were being investigated by every investigation in the country. They have been accused of money laundering. There are lookout notices against them. The Serious Fraud Office and the CBI is investigating them.

The bunch of promoters lived a fancy lifestyle. Had political connections, police connections, CBI connections are absconded. So they’re not even in the picture.

How much do they owe to our Public sector Banks?

As a group sterling biotech and a couple of other companies owe a massive fifteen thousand six hundred crores to the Indian banking system. In this company, we are discussing today sterling biotech or seven thousand five hundred crores.

Did you know, sterling biotech offered to pay forty-five percent as a one-time settlement. Now normally wilful defaulters who are absconding and not coming to India to face the consequences, should not even be people that the banks talked to. But banks have been arguing that getting any money doesn’t matter what its colour or consequences is better than nothing.

They point out that in some other cases there is enough ninety-eight percent. So let’s take this. Funny. Sounds good. None of us want the public sector banks who were actually guilty of the biggest loot to lose money because it’s our money. Whether you have a bank account or not that goes to recapitalize these banks. So one would think – “ok let’s take the money”. But what about the consequences. What about what they are accused of. Pin-drop silence on this.

This company it is headed by a bunch of promoters who absconded and are holed up in Nigeria and they had offered to pay the money that they owe banks through a one-time settlement that was going to be made through their representative without them coming back to India and facing the punishment.

They are facing inquiries and investigation by the Central Bureau of Investigation the Enforcement Directorate (ED), the serious frauds investigation office of the Ministry of Corporate Affairs and the promoters have vanished. They owe a lot of money to Indian banks. The sums are substantial. It’s fifteen thousand five hundred crores with two companies-  one is sterling biotech which is about eight thousand five hundred crores and sterling SCZ which is seven thousand five hundred crores.

Now through their lawyers and emissaries these promoters had offered banks that they would pay just five thousand five hundred crores which is less much less than even forty-five percent of what they owe. It just about covers the principle. Which means that they have been wilful defaulters and enjoy money- interest free from banks because now they are offering to pay money and who knows what else.

Let’s take it one by one. So NCLT was aghast that people who have a red corner alert against them and extradition order dare to say that we will pay the money and all is okay and they will full default goes out of the window. The NCLT hearing appeals from the committee of creditors which is a bunch of nine banks led by Andhra Bank includes IDBI which itself was bailed out by LIC.  NCLT has Now said- okay you can allow it. Take it out of bankruptcy.

We draw it from the liquidation proceedings and accept the one-time settlement. So among the key widths of the NCLT has imposed it has very clearly said that there’s nothing to stop any of the investigation agencies which is CBI enforcement directorate that I mentioned earlier from continuing the investigation against the company as well as the promoters so that will go on but it says there’s nothing brought on record to show that individual property of the promoters has been offered under one-time settlement.

Which means that there is an assumption that there are individual accounts which has quickly clean money which is going to be used to make this one-time settlement. That is at least so sensible conclusion. From this order, now this is frightening for several reasons first directly it has an impact on the Essar steel case. Essar steel as we know is the biggest corporate default of wilful defaulter and Essar committee of creditors had accepted an offer from LNT for 42,000 crores had offered to pay fifty-four thousand crore sources of funds unknown obviously overseas have not been revealed as yet.

As in the case of sterling biotech and they’ve said we will pay everybody including the operational creditors and unsecured creditors. This matter is in the Supreme Court in fact even there was an NCLT order which was considered so controversial that the Bankruptcy Code was amended in super haste and the hearing is now continuing. So the Bankruptcy Code has given a lot of Powers to bankers. Will bankers use these powers to in fact help one-time settlements with dubious promoters what absconding and under investigation.

NCLT order doesn’t close this issue by any means because we know what happens next if the bankers don’t protest. We need to watch whether the investigation agencies are going to appeal the NCLT order and take it to the Supreme Court. Bankers are not going to object. Bankers have an absolute one point that they make which is that if the company goes into liquidation they will write off more than 90 percent of the money. If they accept this offer from dubious promoters, they at least get five thousand five hundred crores back from both companies.

Now this is a very compelling argument because public sector banks after all are the public sector. Government is constantly bailing them out as recently as the finance minister has given 70,000 crores. So one could argue that take the money question is what kind of money what is the colour of money and does it mean that we’re going to make a distinction between how the money is earned. Remember every wilful defaulter most of the big ones had absolutely no background of great wealth. Money was diverted and siphoned off from bank loans that were extended usually to Listed entities.

So not only were bankers treated money but shareholders also treated money went abroad. There are multiple ways in which money goes abroad and then it is either invested in personal wealth, bungalows around the world or aircraft or in companies and businesses. So once this money goes without knowing the source of funds are we going to consider it clean money and it’s coming back from individual accounts not the proceeds of crime I mean it would be absurd if we had investigations that came to this conclusion

So we need to see where the Sterling biotech case goes and we also know that while this order was issued on 28 August. 29th august saw the enforcement directorate summoning and questioning of Ameth patel’s son. Ameth patel is a well-known congress leader so the question is whether this is just a political witch-hunt and are the promoters were absconded staying out of jail being conveniently protected.

If they are serious about getting back money, then why be satisfied with five thousand five hundred crores. Let’s get the whole thing back. Let’s get fifteen thousand five hundred crores back because we cannot allow promoters to say that they are taking money out of India will not come here to face the law and live happily abroad. Will they control the company from there because it’s unclear that when there is an order from the NCLT which says that investigations should proceed, will they come back to face the consequences of which a professional management in place and run the company by proxy from Nigeria.

But what has come out so far is not nice at all this is not the way investigation should happen. This makes a fool out of the people because it’s our money that banks are lavishly distributing. They make losses the Government of India capitalizes banks all the time.

And today imagine 1.7 6 lakh crore of even the Reserve Bank of India’s reserves have been taken away by the government because we can’t seem to get this money back and yet everybody outrageous when we write off our farmer’s loans or write off some bad debts because it is our public sector banks- our National Exchequer- our money which should be used for development that’s going to benefit a few people who definitely don’t deserve to be benefited.

From everybody, from the government, from the regulators, from the investigation agencies instead what we have is this dubious group is negotiating terms. Once things on its terms is arm-twisting banks at will so here’s the latest they say.

First in march they offer to 45% which is three thousand four hundred crore banks rushed to the national company law tribunal to withdraw bankruptcy proceedings because they wanted to accept this when the NCLT Mumbai got to know what is the reason it was furious. There were strictures passed against banks all the regulator’s and investigative agencies were summoned and asked questions and the NCLT said it goes into liquidation because you can’t do a deal like this.

They filed an appeal. When they filed an appeal the appellate tribunal apparently agreed to allow banks to accept this money so on 18th November not only did they agree small little twist they said the money has to come one shot for this one-time settlement within 30 days of the order. And if it doesn’t then it can’t be accepted it goes back to liquidation. Now do these crooked promoters intend to do even this remember they’ve had time from march this is when they first offered the money.

Yet here we are in November where they have a new twist. So what is the twist this time. They say they will pay only 10% from their money. They continue to run a thriving business in Nigeria and nobody is rushing to Nigeria to bring them back unlike the agency is running to London to bring back which Vijay Malia.

Even then they say they’ll pay only 10%. So 90% will come from sources unnamed. It could be underworld money it could be any money. They will and they are not even telling it now they will decide who is going to bring the remaining 90%. If that weren’t enough the new twist is we can’t even pay it all at once forget about the 30 days that NCLT allowed.

For the NCLT, order is shocking. You got such a big relief you are allowed to take crooked money from crooked promoters but they say we won’t bring it in 30 days. We want six months. Apparently there was a meeting of all the lenders including Andhra bank of India, state bank of India and others. In fact, you’ll find the same banks having lent indiscriminately to the most dubious industrialists in this country. Every single bad loan case has these people and we’re talking in terms of hundreds and thousands of crores.

They met on 20th November and what do they do. They are listening to the authorised representative of these dubious promoters telling them how they ought to file an appeal in the supreme court get tough and demand more time and believe it or not banks intend to do that. In fact, they are going to go ahead and do it because that’s how they have been able to twist bankers and lenders. Living abroad scorning they still call the shots.

I’ve already told you what the NCLT is done. That such a suggestion from a failed group of absconding promoters is even discussed at a lender’s meeting tells you the state of the country. Why are you shocked then at what is happening politically because even in the banking system with all kinds of laws are applicable this is what is going on. Some lenders did suggest that this should at least be asked to put their money in earnest escrow account. They have no such intention. They are not even bringing their own money back. It’s ten percent now. Ninety percent from who knows what sources.

Why do we pretend. Why do we criminalize acts? Why do we pretend we have a money laundering law if this is what we are going to do through a legally approved system? Now what’s going to happen in the next few days i am quite certain an appeal will be filed. The highest officials get away by sanctioning these kind of shady activity with silence.

Nobody asks a question when they have connections across the political system. There is no ‘strong’ opposition party. So nobody else is going to raise questions. It will go to the supreme court. It will be fought by absolutely senior high-powered lawyers and who knows they may even get their way.

Allahabad bank, bank of India, Andhra bank, state bank of India and united commercial bank – how many times are we going to bail them out and allow them to misuse our money at every stage. The bankers have scampered to get permission. So here a couple of banks have got permission to do the deal the way they have wanted. They have to complete it by 30th of June but not all bankers have this permission.

So they want to use this some lenders already helping the shady group to drag things. They are talking about 31st march 2024 completion of the process by 31st march. Why not at the end of the year. So the discussion on 20th November was it should be done at the end of the year but because some banks obviously hand-in-glove they want to drag it to the end of the financial year which is 31st march of every year.

Meanwhile they go to court hopefully to buy more time and these promoters sitting abroad don’t be surprised if they pretend to have an independent management and run the company in India sitting there. With all the notices intact the only fools in this whole business will be us. The common man whose power is always underestimated and voices are dialled down.

So the politicians and the political parties disappear after we go and vote and have a black mark on their fingers and you have the bank’s colluding with companies like sterling biotech for personal gains and not public welfare. All over again let’s wake up and let’s question. Otherwise this is going to continue unless and until each of us are aware of the reality.


Please enter your comment!
Please enter your name here