In addition to the company’s CEO, directors and others, unidentified bank employees are also under the scanner
In addition to the company’s CEO, directors and others, unidentified bank employees are also under the scanner
The Central Bureau of Investigation (CBI) has indicted Educomp Solutions Limited (ESL) and others over alleged fraud of Jammu & Kashmir Bank by ₹360.30 crore. The agency had previously booked the affiliates in two other bank fraud cases worth over £2,761m.
In the most recent case, those accused include the company’s then-CEO, Shantanu Prakash; directors Vijay Kumar Choudhary and Vinod Kumar Dondana; Garant Jagdish Prakash, Edu Smart Services Private Limited (ESSPL); and other. Unknown bank employees are also under the scanner.
The accused had approached the bank for credit facilities to complete 1,233 contracts with schools for the installation and implementation of Smartclass devices through ESSPL. The value of each contract was about ₹30 lakh. The bank started extending the loans in December 2011.
In 2014, the bank, together with other lenders under a syndicate agreement, restructured the credit facilities and approved additional funds for the company to purchase receivables in ESSPL after fulfilling the obligations of the respective banks to which these receivables were billed and meeting other liabilities had been.
After the completion of the restructuring, the borrower filed a petition under the Insolvency and Bankruptcy Act before the National Company Law Tribunal in May 2017 and the case was admitted.
During a forensic examination of the transactions, the auditors allegedly found several cases of irregularities. Invoices were falsified, balance sheets manipulated, share prices inflated and funds allegedly diverted to unlisted subsidiaries.
In July 2021, agency Educomp Infrastructure & School Management Limited (EISML) had indicted ESL and others for allegedly defrauding a consortium of seven banks of ₹806.07 crore. The accused had siphoned off the funds through related parties and associated companies.
ESL’s EISML subsidiary is said to have provided long-term lease infrastructure services and management solutions to the schools run by independent trusts and corporations. It developed the school infrastructure and leased it to clients, generating a fixed return on the school’s assets, apart from a fixed percentage of the annual fee income from the organizations that run the schools.
In the CBI case, it was alleged that borrowed funds were used to make investments or to provide loans and advances to related parties or subsidiaries.
Another case was registered in February 2021 against ESL and others for allegedly defrauding a consortium of 13 banks of £1,955m. Fake documents were used to obtain the credit facilities, funds were diverted and loans to related parties were written off as alleged.
Based on the CBI case, the Enforcement Directorate recently seized ₹90.31 crore of assets from an Educomp group company.
