ED nabs former J-K Co-operative Bank chairman in money laundering case

ED nabs former J-K Co-operative Bank chairman in money laundering case

The Enforcement Directorate (ED) has nabbed former J&K State Co-operative Bank chairman Mohammad Shafi Dar in connection with a Rs 250-crore money laundering case, officials said yesterday.

Dar was arrested along with Mohammad Hilal A Mir, the chairman of the River Jhelum Cooperative House Building Society, a “fictitious firm”, according to the officials.

They said the two were produced on Friday before the special Prevention of Money Laundering Act (PMLA) court in Srinagar, which ordered the accused to be remanded in the custody of the ED till Saturday and directed for further hearing in the matter.

The ED had conducted search operations at eight locations in Srinagar, including at Dar’s residence, in connection with the case on Thursday, and these resulted in the recovery of several incriminating documents and digital devices, they claimed.

The fraud was done in the name of the “fictitious” River Jhelum Cooperative House Building Society, the officials said.

The raids were conducted by the ED’s office in Srinagar under powers provided to the agency under the PMLA for search and seizure, they said.

The officials said the ED initiated investigation on the basis of an FIR and consequent charge sheets filed by the law enforcement agency of Srinagar against five accused Dar, Mir, Abdul Hamid Hajam (secretary of River Jhelum Cooperative House Building Society), Mohammad Mujeeb Ur Rehman Ghassi (the then registrar of Cooperative Societies, J&K) and Syed Ashiq Hussain (the then deputy registrar of Cooperative Societies, J&K).

The ED investigation revealed that these persons had managed to fraudulently get a loan of Rs 250 crore sanctioned from the bank in the name of the fake housing society, the officials said.

They said the loan amount was siphoned off as payments made towards the purchase of land parcels, without any collateral security and overlooking all regulatory procedures, and in pursuance of the criminal conspiracy relating to the offence of money laundering under the PMLA.

In August 2020, the Jammu and Kashmir Anti-Corruption Bureau (ACB) had filed a charge sheet in the case against Mir, Dar and others for offences under the Indian Penal Code and the Prevention of Corruption Act.

Mir had moved an application to the secretary of cooperatives, administration department of cooperative societies, seeking directions to the J&K State Co-operative Bank for granting financial assistance to the tune of Rs 300 crore for taking over possession of 37.5 acres of land on the outskirts of Srinagar for the construction of a satellite township, according to the probe by the ACB.

The application was endorsed to the registrar of cooperative societies, Jammu and Kashmir, for taking up the matter with the bank.
It was found in the ACB probe that the bank in Srinagar sanctioned a loan to the tune of Rs 223 crore, without adhering to any codal formalities, including obtaining details of the society such as its balance sheet, profit and loss account, business activities, PAN, income tax returns, and construction of board resolutions.

The inquiry revealed that the cooperative house building society had not even been registered with the registrar of cooperative societies, and Mir by acting in league with Dar and others had prepared a fake and fictitious registration certificate in the society’s name and managed the loan’s sanction.

The loan amount was disbursed to the accounts of landowners but the land had not been mortgaged to the bank, it was found.

Further, the investigation conducted by the ACB was successful in unearthing Rs 223 crore that was siphoned off. An amount of Rs 187 crore has been frozen by the bureau, the officials said.