Syndicate Bank sacks arrested chairman SK Jain

IANS | 23 Sep, 2014, 03.14PM IST 

State-owned Syndicate BankTuesday terminated the services of its suspended chairman and managing director Sudhir Kumar Jain with immediate effect, a day after a court here extended his police custody till Tuesday 

"Syndicate Bank has informed the Exchange that the central government (vide their letter dated 22.09.2014), in terms of Sub-Clause (1A) of Clause 8 of the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980 has terminated the term of office of Shri Sudhir Kumar Jain as Chairman and Managing Director of the Bank with immediate effect," the bank said in a notice to the Bombay Stock Exchange( BSE). 

Jain was arrested last month by the Central Bureau of Investigation on charges of taking bribes to sanction a loan to Bhushan Steel Ltd, as also of enhancing the credit limits of some other companies in violation of procedures. 

Along with the sacked bank chairman, 11 others including the CMD and directors of Bhushan Steel and Prakash Industries have been booked by the CBI under relevant sections of Prevention of Corruption Act, 1988 and criminal conspiracy.

Syndicate Bank Chief Managing Director Sudhir Kumar Jain, others asked to respond on CBI's plea

PTI | 5 Sep, 2014, 06.32PM IST 

NEW DELHI: A Delhi court today sought response of Syndicate BankChief Managing Director Sudhir Kumar Jain, CMD of Prakash Industries Ltd Ved Prakash Agarwal and another accused, arrested in a bribery case, on CBI's plea seeking to record their specimen voice for its ongoing investigation. 

Special CBI judge Swarana Kanta Sharma directed Jain, Agarwal and co-accused Vineet Godha to reply on September 10, when the court will also hear the arguments on CBI's plea. 

The court also said that investigating officer (IO) has not filed the status report, as directed by it, and asked the CBI to place it on record on the next date of hearing. 

The court was told by the IO that CFSL report was still awaited and it was expected to be received in next three-four days after which they will file the status report before it. 

"They (CBI) are directed to positively file the status report on the next date of hearing i.e. on September 10," the judge said. 

CBI, in its application, said that the case was based on intercepted telephonic conversations and specimen voice sample of these three accused was required for its probe. 

These accused, along with others, including Bhushan Steel Ltd Vice Chairman and Managing Director Neeraj Singal, are now in judicial custody till September 11. 

They were arrested in connection with two separate graft cases in which CBI had booked them under the Prevention of Corruption Act and for the charge of criminal conspiracy under the IPC. 

On August 2, CBI had arrested six accused in connection with the case and claimed to have recovered Rs 21 lakh in cash from Jain's residence besides gold worth Rs 1.68 crore and documents of fixed deposits of up to Rs 63 lakh. 

The agency has filed two cases against Jain, accusing him of receiving a bribe of Rs 50 lakh through conduits and abusing his official position to enhance the credit limits of some companies in violation of laid-down procedures.

Syndicate Bank scam :Banks ask Bhushan to sell & lease back critical assets

Manojit Saha  |  Mumbai  August 20, 2014 

A day after effectively taking charge of Bhushan Steel, lendershave delivered another punch. The bankers’ consortium, which met in New Delhi on Monday, has asked the troubled steel maker to sell and lease back some of its critical assets to reduce debt, as the borrower is finding it difficult to raise equity from the market.

This is part of the road map drawn by SBI Caps, the merchant banking arm of State Bank of India (SBI), for recovery of around Rs 40,000 crore that Bhushan Steel has borrowed from 35 lenders.

According to the plan, the steel company has been asked to deleverage by repaying debt. However, given the company’s present problems that led to a slide in its share price, raising equity through a qualified institutional placement was not a viable proposition at this point, a banker who attended Monday’s meeting told Business Standard.

THE STORY SO FAR

AUGUST 2 CBI arrests Syndicate Bank’s chief, S K Jain, over graft charges AUGUST 7 CBI arrests Bhushan Steel Vice-Chairman & Managing Director Neeraj Singal for allegedly bribing Jain AUGUST 8 SBI Chairman Arundhati Bhattacharya says an external agency will be appointed to monitor day-to-day operations of Bhushan Steel. AUGUST 18 Lenders decide to go for forensic audit; say they will nominate three members on the company’s board

The share price of Bhushan Steel has fallen 62 per cent since August 5. The shares closed at Rs 144.90 apiece on Tuesday.

Bankers said four assets, including a coke oven plant, had been identified by the steel company. It is not immediately known how much debt will be reduced through the sale and lease-back.

According to bankers, there is no dearth of buyers for the company’s facilities and SBI Caps is in the process of identifying prospective bidders, which might include global steel producers.

Banks have tightened their grip on the firm since its vice-chairman & managing director, Neeraj Singal, was arrested by the Central Bureau of Investigation on August 7 for allegedly bribing SK Jain, the now-suspended chairman & managing director of Syndicate Bank.

Bankers said the forensic audit, as decided by the consortium on Monday, would be done by an external agency and would seek to find out if the firm diverted the borrowed funds or used those for purposes other than those for which the loans were given.

It would also find out whether there was creation of genuine assets.

These steps were taken even as the loans continue to be standard on the books of banks and have not become non-performing. However, following the liquidity problem that Bhushan Steel, one of the most indebted steel makers of the country, is facing, the loan is now categorised as special mention account 2 that is overdue in 60 days.

A concurrent auditor will also be appointed to monitor cash flows on a daily basis and an independent engineer will look at the operations of the company.

“Given the magnitude of the exposure and the number of lenders involved, banks will take a huge hit if the loan turns bad,” said a senior executive of a public-sector bank.

Syndicate Bank scam :Bhushan shocker: ₹40,000 crore, 51 lenders at risk

 BL :MUMBAI, AUGUST 8:2014

Banks want agency to oversee operations; lenders’ consortium to meet soon

  

With the Central Bureau of Investigation (CBI) arresting Neeraj Singhal, Vice-Chairman of Bhushan Steel, in connection with the alleged Syndicate Bank bribery case, banks are considering engaging the services of a management agency to look after the day-to-day operations of the company to ensure that their ₹40,000-crore loan exposure is not jeopardised.

Fifty-one banks have given loans to the company as part of two lenders’ consortiums – the term loan consortium is led by Punjab National Bank while the working capital consortium is led by State Bank of India.

Lenders’ meet

Arundhati Bhattacharya, SBI Chairman, said: “We will be calling a consortium meeting shortly. The suggestions that we (SBI) have made, and which have been accepted by the banks that we have talked to, is that we will try to bring in a management agency, which will oversee the day-to-day running of the unit.”

At a press meet to announce SBI’s financial results, she said the Bhushan Steel loan was a standard asset. The exposure of India’s largest bank is around ₹6,000 crore, including external commercial borrowing.

‘Good asset’

“This (Bhushan Steel) is a very good quality asset. It is currently running properly. We don’t want, therefore, for it to get into any kind of trouble and create trouble for our exposure.”

Bhushan Steel is India’s third-largest secondary steel producer, with a production capacity of about two million tonnes per annum.

“If this (proposal to engage a management agency) receives the consortium lenders’ approval, then we will definitely be taking this up with the company’s board to see that we put in place such an agency,” said Bhattacharya.

She referred to an earlier instance where the company complied with lenders’ stipulations. When there was an accident in one of the company’s plants, the consortium lenders had wanted it to appoint a safety adviser and take the safety steps recommended by the adviser.

“So, even in this case, I don’t really think that the borrower will have any objections and we would like to put in place a management agency to ensure that the day-to-day transactions or operations are not interrupted,” said the SBI chief.

On Thursday, the CBI arrested Neeraj Singhal, Vice-Chairman and MD of Bhushan Steel, in connection with the Syndicate Bank bribery case. Earlier Sudhir Kumar Jain, Chairman and Managing Director of the bank, was suspended.

On August 2, the agency registered two cases against the Syndicate Bank CMD and 11 other private persons, including the CMD and directors of two private firms based in Delhi, in a bribery case, under sections of the Prevention of Corruption Act, and for criminal conspiracy.

(This article was published on August 8, 2014)