India's Enforcement Directorate (ED) has seized assets worth around US$3 million from a Hyderabad-based firm and its directors in connection with a money-laundering probe.

Sheetal Refineries Limited and people connected with the firm allegedly used fraudulently obtained letters of credit (L/Cs) to defraud State Bank of Hyderabad (SBH) of an estimated US$19 million.

False documents

The refinery submitted to the bank a string of fake documents, including fabricated balance sheets and invoices to obtain various credit facilities from SBH.

Bogus invoices submitted to the bank apparently showed goods purchased against L/Cs in favour of what seemed to be bona fide suppliers.

Diverted funds

But the proceeds of the L/Cs did not reach genuine suppliers and instead were diverted to accounts held or connected with Sheetal or its directors.

In one instance, L/C proceeds finished up in the account of a firm registered in the name of one of Sheetal's employees.

The ED, which is investigating the case under India's Prevention of Money Laundering Act, says it has seized a total of 21 movable and immovable assets.

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