ED freezes

MUMBAI: The Enforcement Directorate (ED) has frozen movable assets worth ₹209.08 crore and seized cash worth ₹55. 85 lakh during searches carried out from Monday to Wednesday at Nagpur and two other cities, as part of its money-laundering investigation into an alleged ₹4,037 bank loan fraud case against the firm, Corporate Power Limited (CPL), its promoters, and others.
ED’s case is based on a First Information Report (FIR) of the Central Bureau of Investigation (CBI), wherein it was alleged by the complainant – the public-sector Union Bank of India (UBI) – that the accused firm/persons in the case had submitted manipulated project cost statements to avail loans and then diverted its proceeds, causing a loss of ₹4,037 crore that amounted to ₹11,379 crore with interest added.
The ED searches were carried out at the official and residential premises of the accused firm and their promoters/directors, Manoj Jayaswal, Abhijeet Jayaswal, Abhishek Jayaswal and others, located in Nagpur, Kolkata and Visakhapatnam.
During the search operations, the ED seized many incriminating documents and froze proceeds of crime amounting to ₹209.08 crore in the form of listed shares and securities, mutual funds, fixed deposits and bank balances. The agency also seized ₹55.85 lakh in cash, ED sources said.
The CBI case was registered against CPL and its promoters/directors and others for alleged offences pertaining to criminal conspiracy, cheating and forgery. ED’s investigation revealed that the promoters of the company had allegedly colluded with each other and conducted fictitious transactions, fabrication of Books of Accounts of the firm and its related entities.
The accused firm CPL is a Special Purpose Vehicle (SPV) of the Abhijeet Group incorporated in 2006 for a power venture in Jharkhand. SPV is a separate legal entity created for a specific or temporary objective, often to isolate financial risk. The ED probe discovered that apart from CPL, other Abhijeet Group entities had also allegedly committed similar bank-loan frauds. The search proceedings revealed that the Abhijeet Group had created an intricate web of 250-plus shell entities that were being used by the accused promoters for the purpose of layering, integration and utilisation of the proceeds of crime.
“These same entities were also used for introducing bogus share premium into the books of accounts and to inflate books of Abhijeet Group entities, enabling them to avail fresh loans from banks through manipulation and doctoring of financials,” an ED source said.
A network of 20-odd charitable institutions, used for the purpose of laundering the proceeds of crime, was also identified during the search proceedings. Dummy directors, who were usually employees of the group, were allegedly employed by the Abhijeet Group, and dormant companies were used as the holding firms.
“Assets were accumulated from the proceeds of crime in the form of movable assets, including listed and unlisted shares, loans and advances, mutual funds, FDs and immovable properties,” the ED source said.
The agency has collected details of several properties belonging to the Abhijeet Group during the search proceedings, whose estimated value is over ₹50 crore and were derived from the proceeds of crime. Apart from the accused persons mentioned in the case, several alleged key persons who acted in connivance with them and had assisted in the process of money laundering have been identified, according to ED. “Their statements were recorded by the ED under the provisions of the Prevention of Money Laundering Act,” ED sources said.