SFIO Tells Delhi High Court That Probe Shows SBI, PNB Guilty Of Dereliction Of Duty In Evaluating Bhushan Steel

A Serious Fraud Investigation Office (SFIO) probe report placed before a Delhi court has revealed tha that the State Bank of India (SBI) and the Punjab National Bank (PNB) are guilty of dereliction in their duties’ while assessing the credit worthiness of Bhushan Steel (BSL).

This act allegedly allowed the debt-laden steel company to avail credit which later bled its lenders, the SFIO probe report has stated.

Incidentally, the SFIO report has been shared with the Reserve Bank of India (RBI) and the Department of Financial Services (DFS) in order to enable them to enquire and take appropriate action against the bankers concerned.

Earlier, the SBI had had engaged Deloitte Haskins & Sells (DHS) of the Deloitte network for a forensic and investigative audit, concurrent audit and cash flow monitoring services of the Bhushan Steel account.

As per the SFIO report, in May 2016, the RBI had directed PNB to audit the steel company for the 2014-16 period as well.

However, since Deloitte was already conducting the audit, the scope of the engagement was revised by the SBI, the SFIO report stated.

The SFIO report has showed that both SBI and PNB failed to resolve the issue of non-cooperation by Bhushan Stell which Deloitte had raised.

The report has stated that red flags during the forensic audit of long-term capital gains and a report by audit firm Kroll which had alleged diversion of funds by the former promoters of Bhushan Steel were never discussed during the joint lenders forum or the steering committee comprising of six major lenders to the company.

Moreover, the SFIO report has stated that both the banks also allegedly ‘tweaked the language’ of a report submitted to the RBI and even shared the draft findings with Bhushan Steel against the advice of the legal counsel of the lenders.