Apart from the company’s MD, directors and others, unknown bank officials are also under the scanner.
Apart from the company’s MD, directors and others, unknown bank officials are also under the scanner.
The Central Bureau of Investigation (CBI) has booked Educomp Solutions Limited (ESL) and others for allegedly defrauding J&K Bank to the tune of Rs 360.30 crore. The agency had earlier booked the concerned entities two other bank fraud cases involving more than ₹ 2,761 crore.
Those accused in the latest case include the then managing director of the company, Shantanu Prakash; Director Vijay Kumar Choudhary and Vinod Kumar Donana; Guarantor Jagdish Prakash, Edu Smart Services Pvt Ltd (ESSPL); and others. Unknown bank officials are also under the scanner.
The accused persons had approached the bank for obtaining credit facility for execution of 1,233 contracts with schools for installation and implementation of SmartClass equipment through ESSPL. The value of each contract was approximately ₹ 30 lakh. The bank started lending in December 2011.
In 2014, the bank restructured the credit facilities under a consortium arrangement with other lenders and after meeting the obligations of the respective banks, approved further funds to the company to buy receivables at ESSPL, thereby charging those receivables and other liabilities were met.
After exiting the restructuring, the borrower filed an application under the Insolvency and Bankruptcy Code before the National Company Law Tribunal in May 2017 and the matter was accepted.
During the forensic examination of the transaction, the auditors reportedly found several instances of irregularities. Invoices were forged, balance sheets were manipulated, stock prices were inflated and funds were diverted into unlisted subsidiaries, as alleged.
In July 2021, the agency booked Educomp Infrastructure and School Management Limited (EISML), a consortium of seven banks on ESL and others for allegedly committing fraud to the tune of ₹806.07 crore. The accused persons had laundered the money through related parties and affiliated entities.
As alleged, EISML, a subsidiary of ESL, has provided infrastructure services on long-term lease basis and management solutions to schools run by independent trusts and societies. It developed the school’s infrastructure and leased it to clients, earning a pre-determined yield rent for the school’s property, in addition to a certain percentage share in the annual fee revenues of the organizations running the schools.
The CBI case alleged that the loan amount was used to make investments or to provide loans and advances to related parties or subsidiaries.
Yet another case was registered in February 2021 against ESL and others for defrauding a consortium of 13 banks to the tune of Rs 1,955 crore. Forged documents were used to obtain credit facilities, funds were diverted, and loans given to related parties were written off, as alleged.
Based on the CBI case, the Enforcement Directorate had recently attached assets worth Rs 90.31 crore of the Educomp Group entity.