ED arrests ex-Maharashtra MLA in bank fraud-linked money-laundering case

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The Enforcement Directorate (ED) has arrested former Maharashtra MLA Vivekanand Shankar Patil in a money-laundering case linked to an alleged fraud of over Rs 512 crore in a Panvel-located cooperative bank, officials said on Wednesday.

They said Patil (66) was arrested by the central probe agency around 8:15 pm on Tuesday as he was allegedly not cooperating with the investigators during questioning at the ED office in the Ballard Estate area here.

The former MLA from the Peasants and Workers Party was arrested under sections of the Prevention of Money Laundering Act (PMLA) and produced before a court here that sent him to ED custody till June 25.

The ED's money-laundering case is based on an FIR registered against Patil and about 75 others in February last year by the Economic Offences Wing (EOW) of the Navi Mumbai police that alleged irregularities to the tune of Rs 512.54 crore in the Karnala Nagari Sahakari (cooperative) Bank that is headquartered in Panvel in the neighbouring Raigad district.

Police had named Patil, the former chairman of the bank who had represented the Panvel and Uran constituencies in the Maharashtra Assembly in the past, as an accused along with its vice-chairman, chief executive officer and several others who had obtained loans from the bank.

The alleged fraud came to light after an audit of the bank was carried out on the directions of the Reserve Bank of India (RBI) in 2019-20, the ED said in a statement.

"The audit revealed that Patil was siphoning off funds since 2008 from the bank through 63 fictitious loan accounts to the loan accounts of the Karnala Charitable Trust and the Karnala Sports Academy, which were founded by him."

"It was found that the management of the bank was under the control of Patil and in order to siphon off the funds, Patil used some old accounts of the bank, got these accounts renewed and large amounts were transferred from these accounts to the said trust accounts," the ED alleged.

No collateral securities, it claimed, were taken against such loans and no correspondence was made with the revenue authorities regarding the payment of stamp duty for the purpose of purchasing immovable properties for which the loans were obtained.

"This made the loans unsafe or unsecured and all the loan accounts from where funds were transferred to the said trust were found to be NPAs (non-performing assets).

"It was further observed that without following the KYC (know your customer) norms and other RBI guidelines, the said loans were sanctioned and disbursed at the instruction of and for gains by Patil," the agency said.

The police, in its FIR, had pressed charges such as criminal breach of trust and cheating among others under the provisions of the Indian Penal Code, the Cooperative Societies Act and the Maharashtra Protection of Interest of Depositors Act.

The bank is stated to have been established in 1996 under the Cooperative Banks Act after Patil received a licence from the RBI.

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