Chennai: In yet another case of alleged financial fraud, the CBI has registered a case against industrialist and former BCCI chief A.C. Muthiah and Farooq Irani for their managerial roles in First Leasing Company of India Ltd.
Top former executives of United India Insurance also figure in the case registered on the scam. The CBI, it its FIR dated July 20, had included A. Balasubramanian, then DGM of UIIC, KL. Kunjilwar, then chief manager of UIIC along with two top executives of the First Leasing Company and registered the case under various sections, including prevention of corruption act, cheating and criminal conspiracy.
The CBI says that UIIC invested in privately placed unsecured redeemable non-conver.15 crore in May 2012 for a period of 5 years and 3 months with maturity on 9 August 2017, at an interest rate of 12 per cent based on a ‘AA’ rating, which was downgraded to ‘C’ in January 2014.
IRDA norms flouted in case, says CBI
On March 31, 2011, FLC showed in its accounts that it made a profit after tax of 32.32 per cent (Rs 70.75 crore). But CBI says the PAT for that year included Rs 53.42 crores being profit on a sale of investment, which is not regular income from the business. If this is excluded from the PAT, the actual PAT would be only Rs 17.33 crore at 7.43 per cent margin. Hence the company played a fraud by furnishing bogus figures in the annual report, the CBI says.
CBI, in its FIR, further notes that if the officials of UIIC, who had recommended the investment in the FLC, had studied the company properly, the investment loss which happened in a period of one year would have been avoided. Though the company’s rating was high, due diligence was not carried out as per IRDA norms.
FLC, in the financial year 2012-13, paid an interest of Rs 1.8 crore and thereafter stopped paying interest and the Rs 15 crore investment has become an NPA. The CBI concludes that all the suspects conspired together and cheated UIIC, Chennai causing a wrongful loss to the company and corresponding wrongful gain to First Leasing Company.
In 2015 CBI had registered a case against Muthiah and several others for causing an alleged loss of Rs 274 crore to the IDBI Bank.
