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CBI points finger at Sidbi staff in Mesco case

Bhupesh Bhandari & Sandip Das

The Central Bureau of Investigation has filed a first information report saying that some senior functionaries of the Small Industries Development Bank of India abused their official position between 1993 and 1995 causing undue pecuniary advantage of Rs 340 million to Mesco group companies Mideast India Ltd and Mesco Pharmaceuticals and a corresponding loss to Sidbi.

A fax sent to Sidbi chairman and managing director P B Nimbalkar seeking his response to the various charges did not elicit any response.

All attempts to contact Rita Singh and J K Singh, the promoters of the Mesco group, proved futile.

The FIR says that Mideast India approached Sidbi vide its application on August 10, 1993, for a bill discounting limit of Rs 40 million.

The Sidbi officials sanctioned a limit of Rs 15 million and gradually enhanced it to Rs 200 million by September 24, 1995.

"The enhancements were done by the aforesaid officials of Sidbi without adhering to the laid down procedures and in contravention of the guidelines issued by Sidbi from time to time," the FIR reads.

It also says that against this bill discounting facility, Mideast India discounted bills aggregating Rs 1.54 billion between November 24, 1993 and September 26, 1995.

Most of these bills were issued by group companies Bokiyu Tanneries, Littel Rome Ltd, Mesco Exports and Suman International.

As per the FIR, the bills discounted were forged and bogus in nature. As on June 13, 1997, bills aggregating to Rs 169 million and interest of Rs 103 million were due.

Similarly, the FIR says, Mesco Pharmaceuticals discounted bills aggregating Rs 179 million issued by other group companies Dhana Pharmaceuticals, Mesco Laboratory and Cougar International between September 28, 1994 and September 20, 1995.

These bills too, the FIR says, were forged and bogus in nature. "All these bills were accommodation bills and no actual supply of goods had taken place," the FIR reads.

The FIR filed by CBI also says that it is alleged that the chartered accountant of the two companies falsely issued certificates that the said suppliers were small scale units and these certificates were accepted by Sidbi officials without proper verification.

It goes on to say that Rita Singh and J K Singh pledged duplicate shares of Mideast India and Mesco Pharmaceuticals as collateral for the bill discounting limits sanctioned, though the same shares had been pledged by them with other financial institutions.

"The funds released by Sidbi against the aforesaid limits were misutilised/converted to their own use by the directors of the aforesaid two companies," the FIR adds.

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