The Serious Fraud Investigation Office (SFIO) on Thursday arrested Neeraj Singhal, former Promoter and Managing Director of Bhushan Steel Limited (BSL), and sent him to judicial custody till August 14.
"This arrest was made as part of the investigation into the affairs of BSL and its several group companies by SFIO," Ministry of Corporate Affairs said in a statement.
The ministry had assigned the probe to SFIO based on complaints received.
SFIO, the government's arm that handles complex financial fraud cases, made the arrest based on material in its possession that revealed Singhal is guilty of indulging in serious corporate fraud punishable under the Companies Act, 2013.
The team, in its ongoing probe, found BSL erstwhile promoters used a multitude of complex, fraudulent manoeuvres to divert funds amounting to thousands of crores raised from public sector banks using its several associate companies. Some reports suggest he siphoned funds worth Rs. 2,000 crore.
"This has led to wrongful losses to the banks and other investors in these companies," the statement said.
The ministry further stated that the erstwhile promoters and directors of BSL have not been cooperating. Apart from failing to appear, material facts were also concealed.
After insolvency resolution, the ownership and control over BSL has been transferred to the Tata Group.