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FinCEN Files Raise Red Flag over Bhushan Steel Limited – Indian Express

Steel News - Published on Thu, 24 Sep 2020

Image Source: FinCEN Files Bhushan Steel Limited
According to records investigated by The Indian Express, multiple transfers from a bank in Latvia and two electronics firms in the UAE and a series of circular transactions with a Dubai company are among the financial transactions linked to Bhushan Steel Ltd red-flagged by foreign banks to the US Financial Crimes Enforcement Network. These transactions, totalling USD 4.39 million, figure in several Suspicious Activity Reports sent between 2012 and 2015 to the US regulatory agency that enforces money laundering laws, the records show. Some of the SARs related to Bhushan Steel focus on nested money transfers involving Meridian Trade Bank, in Latvia on behalf of a London-based entity. Nesting is a route taken to mask the money trail and occurs when a foreign bank uses the correspondent US account of another bank for its customers. For FinCen, nesting is of particular concern when banks conduct transfers on behalf of suspected shell companies.

Records show that Bank of New York Mellon flagged at least three nested transactions worth USD 454,822 from Meridian Trade Bank on behalf of London-based Randview LLP between 2014 and 2015. These wire transfers were received in the accounts of Bhushan Steel at Canara Bank and ICICI Bank, and part of 126 alleged suspicious transactions pertaining to Meridian Trade Bank that were reported by BNYM in 2015.

Another SAR from Standard Chartered Bank New York flagged alleged suspicious transactions worth USD 2,761,523 between UAE-based electronics firm, Great Way General Trading FZE, and Bhushan Steel between July and November 2013. The bank identified 234 transactions worth about $1.15 billion pertaining to Great Way General Trading. It termed the transactions suspicious because the firm was involved in third-party remittances, where funds are transferred with instructions that they be moved further to a third entity, typically an unknown ultimate beneficiary.

Standard Chartered New York also flagged a USD 386,600 transaction from 2012 between Bhushan Steel and Ultra Grace Ltd, another Dubai–based electronic spare parts dealer. The bank found Ultra Grace’s transactions inconsistent and unusual with its main business. The company was also not contactable, said the SAR.

The New York branch also flagged alleged circular transactions from 2012 worth about USD 797,033.55 between Bhushan Steel and Dubai-based Golden Century Limited, a cosmetics and construction goods manufacturer. The bank identified 208 transactions worth USD 1.29 billion received and remitted by Golden Century globally between May and December 2013.

In 2017, two years after the last of these SARs were sent to FinCEN, the RBI initiated bankruptcy proceedings against Bhushan Steel for alleged loan defaults worth INR 56,000 crore, triggering probes by the Serious Fraud Investigation Office and Enforcement Directorate. A year later, the company was acquired by Tata Steel for INR 35,232 crore through the insolvency process.

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Posted By : Yogender Pancholi on Thu, 24 Sep 2020
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