The biggest scam of 2020!

 

Just when India was on the verge of forgetting it's past financial disasters and was recovering from the massive financial blow that Covid gave, came out one of the biggest scams of the India which may effect the Indian economy like no other previous scams. I am talking about the Transstroy scam. This scam is reported of a huge amount of ₹ 7,926 crores. 

First let's talk about Transstroy. 

Transstroy is a company from Hyderabad. It was incorporated in 2001 and it had interests in the infrastructure sector. And considering one of the directors happened to be a former MP from Andhra Pradesh, they had no problems accessing loans and government contracts. But there are many allegations surrounding the company right off the bat. In fact, when Transstroy bagged the ill- fated Polavaram irrigation project in Andhra Pradesh, many cried foul over the decision. It was alleged that Transstroy and its Russian joint venture partner had submitted fake documents, claiming they had built dams and irrigation projects is Kazakhstan, Russia and China. But after the government stated that it had sent a team of engineers to verify these assertions, they eventually greenlit the decision- Although it was later revealed that Transstroy officials had accompanied the team on the visit to Russia. 

There was definitely something going on at Transstroy and eventually a forensic audit blew the lid off the whole scheme. According to reports, the accused borrowed around ₹9,000 crores from multiple banks over the years and then floated several "non-existing companies" in a bid to execute an elaborate plan to divert funds. As per one report in the Newsmeter, the accused apparently named maids, sweepers and drivers as directors of these absolutely fictitious companies.

As per another CBI report from 2019, the company apparently made total purchases worth about ₹2,500 crores between 2016 and 2017. But here's the thing. These were the receipts showed. To be absolutely certain that they actually made these purchases, you have to verify them independently. However, when instigators from Ernst and Young demanded the company to furnish more details about these purchases, they weren't provided with any. In fact, according to EY's estimated, the company only made purchases worth ₹270 crores. The rest was most likely made up.

In another egregious case, the company apparently purchased multiple machines with identical engine serial numbers from two different vendors. Its highly unlikely. and while the company in its reply claimed that this was merely an oversight, its hard to believe this statement. Especially when you consider these other discrepancies.  

As one report states -

In connection with one of the documents related to Polavaram irrigation project, the CBI expressed shock on learning that Transstroy, who is the contractor, had stored stock worth ₹ 1,753 crores at the irrigation site. "It is not clear as to how such huge stock can be stored at project premises," the CBI said.

Imagine storing stock worth ₹1,753 crores in just one place. It will cost any company a good fortune and until you have useless funds at your disposal, it's not possible. Transstroy also paid out ₹5 crores for gold and silver articles. And while the company states that this was merely a donation to Goddess Padmavathi, the banks allege that this was a clear cut case of misappropriating funds. As they succinctly noted - "Donating the gold to the temples is not the purpose for which the money is lend by the Consortium of Banks."   

In another case, the company is alleged to have purchased and supplied steel using "Autorickshaw." In another instance, CBI investigators found the company had delivered several metric tons of material using two-wheelers. And while we could go on and on about these discrepancies, it really doesn't do much, except drive home the point that is probably another case where public funds were diverted for private gains.

The latest updates from the case are :

• CBI continues to investigate the matter and reports to be struggling in collecting the financial statements of the company.
• Canara banks reports it's exposure in this case to be of ₹678.28 crores.
• Transstroy India denies all fraud allegations and questions the banks if they have proper checks in place.

And even after so many frauds in the past, the Indian corporate sector has so many loopholes that such big scam is taking place in which money is drawn not just from one source.

What do you think about this?

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