SEBI notice to former chief GN Bajpai in Rs.975 crore GB Global fraud
The case has exposed one of the largest banking scams and raises concerns about oversight and integrity at the top level
The Securities and Exchange Board of India (SEBI) has issued a show-cause notice to its former Chairman, Ghyanendra Nath Bajpai, in a Rs.975.08 crore bank fraud involving GB Global Ltd (formerly known as Mandhana Industries Ltd).
The notice also named many others, who are believed to have played a role in the financial scheme.
Jointly investigated by SEBI and the Enforcement Directorate (ED), the case has revealed a massive network of circular trading, shell companies, and large-scale fund diversion. These were allegedly masterminded by the company’s directors Purushottam Mandhana, Manish Mandhana, and Biharilal Mandhana.
The nationwide ED’s raids on 26 June 2024, including 12 locations in Mumbai, revealed the extent of the fraud. Investigators found that company employees were used as fronts to facilitate the illegal movement of funds. While loans were routed through bogus purchases and accommodation entries, the money was transferred to the promoters, their relatives, and associated entities.
The ED stated that the Mandhana family allegedly incorporated fictitious entities using company employees as fronts to layer funds and siphon off loan proceeds. These entities facilitated suspicious third-party transactions, diverting funds to the accounts of promoters, their family members, and related parties through bogus purchases and accommodation entries.
The company is accused of causing a loss of Rs.975.08 crore to banks due to illicit activities. Considering the massive scale of fraud, the authorities have frozen shares and securities worth Rs.5 crore, sealed multiple bank accounts and lockers and seized high-value luxury cars and items including expensive watches such as Rolex and Hublot.
The case drew particular attention due to the involvement of SEBI’s former chief Bajpai, who led the regulatory body from 2002 to 2005 and earlier chaired the Life Insurance Corporation of India. His alleged links to the matter have raised concerns over regulatory lapses and possible conflicts of interest at the highest levels.
Since, in a rare instance, a former head of a financial regulator is being questioned on a major corporate fraud, the spotlight is on SEBI’s internal mechanisms and the extent to which former officials can be held responsible for their post-retirement affiliations and actions. The case could set a precedent for accountability in the country’s financial governance structure.