Gujarat terminates Sterling Group’s Dahej port contract

      07/09/2019

The Gujarat government on Monday informed that it has taken strong action against fugitive businessman Nitin Sandesara and his group companies following an alleged multi-crore bank fraud.

Chief Minister Vijay Rupani has ordered termination of the permission granted to the Sandesaras-promoted Sterling Port Ltd for developing all-weather berthing facilities at Dahej port in South Gujarat.

The Chief Minister has also asked the state port authority, the Gujarat Maritime Board (GMB), to take immediate action to recover dues from Sterling Port Ltd. Sterling allegedly owes Rs 80 crore to GMB.

According to a government statement, the said developer and its investors were granted six months’ time to honour the contract but nothing moved. GMB had convened an urgent meeting to initiate strong action against the errant company and its promoters. A committee was formed, which decided to appoint Andhra Bank as the licensor. The committee recommended termination of the contract signed among the Government, the GMB and Sterling Port and invocation of the guarantee provided by the company.

It was also recommended that the State government reclaim the 84.95 hectare allotted to Sterling Port for the purpose.

According to the Enforcement Directorate (ED), Sandesara, through the Sterling Group, has allegedly cheated Indian banks to the tune of Rs 14,500 crore.

In December 2008, the Sterling Group was selected for the said Dahej port development and a letter of intent (LOI) was awarded to the company in January 2009. Subsequently, in June 2010, GMB allocated 84.95 hectares on lease to the company and granted permission for land development. The permission to construct the port was granted by GMB in March 2011.

The Group’s flagship firm, Sterling Biotech Ltd, and its consortium members jointly floated a separate company --Sterling Port Ltd -- to build the port. A concession agreement with GMB was signed in June 2014 for the same. However, as per the agreement, the company was supposed to invest Rs 2,500 crore for the development of the project. It was decided to submit Rs 5 crore or 1.5 per cent of the total project cost as performance guarantee with GMB.

But there was no progress on the project after signing of the letter of intent and the concession agreement, and the company failed to deposit the required Rs 37.5 crore bank guarantee with GMB as well as pay the lease rent for the 84.95 hectares.

Last month, the ED attached Sandesara’s properties worth Rs 9,778 crore, including oil rigs in Nigeria, ships, a business jet and a plush flat in London in connection with the bank fraud case. Earlier, assets worth Rs 4,730 crore had been attached. The ED had registered a case of fraud against SBL and its promoters in October 2017.

The promoters including Nitin Sandesara, Chetan Kumar Sandesara, Hitesh Kumar Patel and Dipti Sandesara had allegedly siphoned off the bank loans to finance their Nigerian oil business. They had splurged the monies for their personal use too. It is also alleged that the company had diverted loan funds for ‘non-mandated purposes’ through a web of domestic and offshore entities.