CBI files FIR against Mumbai-based GTL Infra for bank fraud worth Rs 4,063 cr

The Central Bureau of Investigation (CBI) has registered a case against Mumbai-based GTL Infrastructure Ltd and others in connection with an alleged fraud of Rs 4,063 crore involving a consortium of 19 banks and financial institutions.

The CBI registered the case on August 16 against GTL Infrastructure and unknown public servants and unknown others on charges of criminal conspiracy, cheating and criminal misconduct. 

The officials of 13 banks are under the agency's scanner for allegedly assigning Rs 3,224 crore dues of the company to an asset reconstruction company (ARC) for Rs 1,867 crore without attempting to secure their loans from collateral securities, the FIR alleged.

The FIR against the GTIL and others were registered after the agency carried out a preliminary inquiry on the basis of an information regarding financial impropriety and irregularity in the matter of credit facilities being availed by GTL Infrastructure from a consortium of 19 banks and financial institutions (FIs).

The CBI said its inquiry revealed that GTL was incorporated on February 4, 2004 under the name of GTL Engineering and Managed Network Services Ltd and the name was changed to GTL Infrastructure Ltd in February 2009. 

It said the company belongs to Global Group Enterprise promoted by Manoj Tirodkar and is engaged in the business of building, operation and maintenance of passive telecom infrastructure sites capable of hosting multiple service providers 

"The inquiry revealed that GTL in 2011 had expressed its inability to service interest installments on the credit facilities being availed by it from various banks and financial institutions. It also informed its inability to raise the equity and shortfall in revenues," the inquiry report said. 

It also said that accordingly, the company was referred for corporate debt restructuring (CDR).

"The CDR empowered group approved the package for restructuring on December 23, 2011. However, the CDR failed and thereafter the lenders decided to invoke strategic debt restructuring (SDR) in 2016.

"During CDR and SDR, out of total outstanding loan of Rs 11,263 crore, debt of Rs 7,200 crore was converted into equity shares, thereby leaving the outstanding amount at Rs 4,063 crore which was payable by GTL to the lenders (consortium of 19 banks/Fls)," it said.

"The inquiry revealed that GTL had diverted a substantial amount of the loan funds through different vendors, which were in fact related parties having common directors and addresses with GTL.

"The forensic audit report of Nikesh Shah has revealed that substantial amount of funds being given by GTL to the vendors (which were not returned, neither goods supplied and later written off) had been invested in European Projects and Aviation Ltd (EPAL) or GTL or Chennai Network Infrastructure Ltd (CNIL- sister concen of GTL) during the same period of giving of the advance from 2011-12 to 2013-14," it alleged.

The inquiry further revealed that during the year 2018, GTL was having outstanding credit facilities from various banks and financial institutions. 

The FIR also alleged that during inquiry, it was revealed that a proposal for sale of aforesaid debts of Rs 4,063.31 crore to Edelweiss Asset Reconstruction Company (EARC) was discussed by the consortium of 19 banks and Fls.

"However, the said proposal of assignment of debt to EARC was dissented to by Canara Bank on the grounds that no fresh valuation of hypothecated or mortgaged assets was done to justify the offer of Rs 2,354 crore by EARC when the total depreciated value of the plant and equipment of GTL as on March 31, 2018 was Rs 7,944.50 crore," it said.

The FIR also stated that as per the audited balance sheet of the company, GTL was having 27,729 telecom towers with useful life of 35 years and the value of same was Rs 10,330 crore approx, as per a similar deal between ATC Telecom Infrastructure and Vodafone India Ltd.

It said that it was also revealed that despite the dissent of Canara Bank and some other members of the consortium, 79.3 per cent of the outstanding dues amounting to Rs 3,224 crore was assigned to EARC by 13 banks, including Union Bank of India, Central bank of India, Indian Overseas Bank, Bank of Baroda, ICICI Bank, Punjab National Bank, Oriental Bank of Commerce, Andhra Bank Bank of India, State Bank of India, Axis Bank, United Bank of India and Dena Bank for a consideration of approx Rs 1,867 crore, causing huge wrongful loss to the banks.

The CBI also alleged that at the time of assignment of debt to EARC, as on March 31, 2018, the banks were holding 64.97 per cent equity of GTL comprising 1,212.17 crore shares. 

"The promoters were holding 19.52 per cent of equity. Despite that the banks did not choose to sell their equity in block deal or to adopt the procedure under the SARFAESI Act to secure their loan from the collateral securities, i.e., plant and machinery having depreciated value of about Rs 7,944.50 crore and instead, with malafide intention, adopted the ARC route, thereby causing huge wrongful loss to themselves," it alleged