Back in 2009, the authorities were left reeling when they discovered fraud worth thousands of crore rupees. The CBI has since been chasing Sudheer Sriram, a businessman who was based in Bengaluru, and who is believed to be in the UAE.
With Sudheer’s anticipatory bail plea coming up for hearing in the Karnataka High Court this week, the Interpol and CBI hope that they would finally be able to get their hands on him and arrest him for good.
The fraud
Sudheer was reportedly one of the directors of Future Metals Pvt Ltd (FMPL) and Future Exim India Pvt Ltd (FEIPL). The companies had registered offices at Barton Centre at MG Road in Bengaluru, Bangalore Mirror reports. However, now a realty company occupies that space.
Both FMPL and FEIPL traded in high quality ferrous and non-ferrous metal scraps, coal and agro products.
In 2008, the companies began a business association with Spices Trading Corporation Ltd of India (STCL), a subsidiary of State Trading Corporation of India (STC). They were to trade in high value non-ferrous scrap, primarily copper and nickel. This was a departure for STCL which had been confined to spice trade till 2006-07. However, the year it ventured into scrap trade, its scrap metal imports accounted for nearly 70% of total imports.
These companies were to buy and import scrap worth $250 million from Hong Kong, New Jersey, Singapore, South Korea and UAE based companies.
The Enforcement Directorate (ED) in 2009 unearthed what it called a “deep rooted conspiracy” where important documents relating to the transactions facilitated by FMPL, FEIPL and STCL appeared to be manipulated.
The fraud came to light after 134 Letters of Credit (LC) facilitated by STCL to enable these transactions, became overdue. An LC is a document which is issued from one back to another in a foreign country to assure transaction with the person or entity concerned. The LCs facilitated by STCL were issued by eight banks – five nationalised banks and three private ones – and were valid for 90 to 120 days.
The public-sector banks were Vijaya Bank, State Bank of India, United Commercial Bank, Canara Bank and Union Bank of India. The private sector banks involved were IDBI, Axis Bank and Yes Bank.
Investigation by the ED shed light on the fact that the documents were furbished in the way they appeared convincing to the banks to issue LCs an “irregular transaction”.
The consignments of scrap were inspected in 2009 and were found to be cheap iron scrap, not high-quality copper and nickel, leading to STCL suffering losses. Further investigation revealed that the companies with which STCL traded with through Sudheer’s FEML and FEIPL could all be traced back to him, his family or associates.
A case of criminal breach of trust, cheating and conspiracy was initially registered against both Sudheer and STCL Managing Director KC Ponnanna. It was found that as per their agreement, FMPL and FEIPL were liable for all risks involved.
The ED raided the offices of FMPL and FEIPL on June 30, 2009, but Sudheer was reportedly not in Bengaluru at the time. STCL employees were also questioned.
The struggle to catch Sudheer
The case was transferred to CBI in September 2009. Meanwhile, Sudheer had managed to escape to UAE, after costing the public exchequer a whopping Rs 1208 crore. In April 2013, the Karnataka High Court issued a non-bailable warrant against him, followed by an Interpol red corner notice in May 2015.
He was arrested that year in Spain, and claimed that he was in the country to deal with matters of college education of a relative.
Sudheer’s counsel approached the Karnataka High Court with a criminal revision petition, assuring them that Sudheer would appear for investigation and to suspend the red corner notice against him. They reportedly showed flight tickets as proof.
The red corner notice was subsequently stayed and though Sudheer was to appear before CBI officials for questioning in October 2015, he managed to use his release from Spain to abscond to the UAE, a country India has no extradition treaty with.
A second chance for the CBI?
The CBI now has a chance to get their hands on Sudheer almost a decade later now, thanks to his expired passport.
Sudheer had filed a writ petition asking the Centre, external affairs ministry and CBI to give him access to his impounded passport which was due to expire on December 31, 2017 for renewal. However, the Karnataka High Court rejected his plea in December 2017.
According to the CBI, Sudheer has four passports, which is how he has been travelling between countries despite his passport being impounded. The CBI also argued in December that as per Section 6 and Section 10 of the Passport Act, a passport cannot be issued to a person with a criminal case pending against them or if they are facing a warrant.
The court, therefore, directed Sudheer to approach the Indian Embassy in his present country of residence and seek emergency travel documents. It added that if Sudheer does not return to India within four weeks of filing the application, the Interpol red corner against him would be reinstated.