India's Enforcement Directorate has attached assets worth US$6.4 million belonging to company directors accused of fraudulently using letters of credit (L/Cs) to obtain loans.

Shree Mahalaxmi Corporation and its directors stand accused of cheating the State Bank of India (SBI) out of US$24.6 million by taking out a loan based on forged documents.

Rotated funds

The directorate's investigations revealed that the proceeds of the loan were diverted after funds were rotated through bank accounts maintained by various entities to give the impression of a series of genuine business transactions.

Investigators say various L/Cs were opened in the name of several companies against the credit facilities provided by SBI.

Proceeds siphoned off

The L/Cs were then discounted on the basis of forged invoices and other documents according to the directorate. It says the L/C proceeds were then laundered and siphoned off.

The attached assets comprise 11 properties belonging to the directors of Kolkota based Shree Mahalaxmi Corporation, which manufactures LED bulbs and solar water heaters and wholesales a range of solar lights.

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