Two BJP MPs, whistleblower move IBBI over ‘dubious’ role of Resolution Professional

By Anand Singh

New Delhi, Oct 7 (SocialNews.XYZ) Two BJP MPs have approached the Punjab National Bank (PNB) and the IBBI, questioning the role of a resolution professional in Topworth Steels and Power Pvt Ltd process, alleging that he has been committing fraud on the corporate debtor who he represents and creditors whose interest he is supposed to protect while running the process as per the Insolvency and Bankruptcy Code.

On September 23, BJP MP from Jharkhand's Koderma, Annapurna Devi and Uttar Pradesh's Banda R.K. Singh Patel wrote to authorities concerned, alleging that Sanjay Gupta, who has been appointed as Resolution Professional for Chhattisgarh-based Topworth Steels and Power, has been involved in malpractice and siphoning money from the company.

The two MPs also accused Gupta of introduced his own suppliers and vendors, who are helping him siphon the money and that he is purchasing raw materials at a higher price (up to Rs 500-1,00 per MT) and selling finished goods at a cheaper price to the local market price, thereby causing loss to the firm and in turn, to its creditors.

According to a whistleblower in Topworth Steels and Power, Gupta adopts the measure of an extremely low assignment fee to get selected as Resolution Professional, and after his selection, introduces new suppliers and vendors to work along with existing business partners.

"He (Gupta) only conducts business with the suppliers and vendors who are ready to help him siphon off money and bleed the corporate debtor as he purchases raw materials at a higher price and sells the finished goods at lower price," the whistleblower said.

He said that in his assignment as Resolution Professional at the company, the fee quoted by Gupta was Rs 5.5 lakh which includes remuneration for legal and technical experts, noting that for a company like Topworth Steels and Power, the fee for such a job would vary between Rs 12 to 15 lakh.

He said that Gupta, after being appointed, started replacing auditors and appointing his loyalists as consultants at the company, and even his employee as a legal advisor at Rs 3 lakh per month, in addition to fees for appearance and drafting equivalent to a good counsel.

He further said that the Resolution Professional also changed the cost auditors without any explanation at a very high fee.

Citing the alleged irregularities by Gupta, the whistleblower said that he has instructed for issuing a purchase order of raw material at a higher price.

"The cost of raw material purchased were higher by Rs 300 to Rs 800 per Metric Tonne to the local price. He also sold finished goods at discounts of up to Rs 1,000 to Rs 1,100 per metric tonne on the market price on the basis of immediate cash being paid by the purchaser," he said.

Sharing some of such purchase and sale orders, the whistleblower said that Gupta issued a purchase order on August 6 for 3,000 metric tonne of iron ore pellets, at Rs 7,465 per metric tonne, to Laxmi Steel Industries from Bhilai, whereas the same quality iron ore pellet was available at Rs 7,000 per MT.

Similarly, a purchase order to procure 4,000 MT of South African coal at Rs 6,090 per MT from Raipur-based Animesh Ispat Pvt Ltd was issued on August 11, whereas the same non-coking coal was available in the market at Rs 5,200 per MT on the said date.

The whistleblower also shared 6 more purchase orders between August 12 to August 25, saying that a full transaction audit will unearth more wrongdoings.

He alleged that Gupta's actions have resulted in leading to the ultimate demise of the corporate debtor, thereby defeating the purpose of the IBC code.

The revelations come almost 45 days after the Enforcement Directorate (ED) raided Resolution Professional in the Bhushan Power and Steel Ltd (BPSL) matter, Mahender Kumar Khandelwal, for allegedly helping the former promoters of the company in "clandestinely" clearing finished goods for which he was paid in cash.

The ED, in a statement on August 20, had said that the BPSL had engaged in clandestine clearances of finished goods from its Odisha plant to its plants at Kolkata and Chandigarh, with goods valued at Rs 700 crore being cleared without payment of applicable taxes and duties and without issuance of any statutory invoice.

".. this practice which was resorted to by the erstwhile management of the company had continued even after initiation of CIRP (company insolvency resolution process) and some irregularities on part of Resolution Professional M.K. Khandelwal were also revealed", it said.

Similarly, the ED on Tuesday said that it arrested Cox and Kings Group's internal auditor Naresh Jain for siphoning and diverting money in the Yes Bank case.

(Anand Singh can be contacted at anand.s@ians.in)

Source: IANS