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ED Attaches Rs 110 Cr Assets In Karvy Money Laundering Case

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By: Anand Singh
Updated: July 30, 2022 17:26
Enforcement Directorate
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NEW DELHI: The Enforcement Directorate (ED) has attached assets worth Rs 110 crores belonging to Karvy Stock Broking Ltd (KSBL) and its Chairman Comandur Parthasarathy in a money laundering case.

The properties are in the form of land, buildings, share holdings, cash, foreign currency and jewellery under the Prevention of Money Laundering Act (PMLA), 2002, the agency said on Saturday.

With this, the total attachment in the case so far stands at Rs 2,095 crores. Earlier, the ED had attacked properties worth Rs 1984.84 crores in the money laundering case.

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The case was registered on the basis of FIRs registered by Central Crime Station of Hyderabad Police over complaints by some leading banks.

In their complaints, the banks had alleged that Karvy Group availed large amounts of loans by illegally pledging their clients’ shares worth about Rs 2,800 crores. On the orders of the National Stock Exchange (NSE) and Securities and Exchange Board of India (SEBI), the banks later released the clients’ securities and categorised Karvy’s loans as non-performing assets (NPA).

According to the agency, loans were diverted from the stated purpose by a set of high ranking functionaries working under the overall control of the chief managing director.

“Funds were diverted to related companies like KDMSL and KRIL that were set up for real estate ventures. Diverted loan funds were routed via multiple defunct NBFCs to KFSL-NBFC to wash its bad debts and large chunks of loan proceeds were transferred into shell insurance companies which did massive speculative share trading with KSBL as the stock broker and ostensibly suffered massive losses,” the ED said.

It said that Karvy laid down a “very complex web of financial transactions” to commit the crime.

After registering the case, the ED had arrested Parthasarathy and the group’s chief financial officer G Hari Krishna. Both are presently out on bail.

Large amounts of proceeds of crime have been ‘invested’ in the form of share capital or short term advances or loans to group companies, which, the ED said, resulted in enhancement of the value of the subsidiary companies of KSBL.

“Now the accused are trying to sell these subsidiary businesses at a profit to yield indirect windfall gains to the main accused.”

It also said that Parthasarthy had made arrangements through his group companies to pay financial benefits to his sons Rajat Parthasarthy and Adhiraj Parthasarthy in the garb of salary and reimbursement of household expenses.

Investigation revealed that V Mahesh, MD of KDMSL and a key management figure in Karvy group is a close associate of Parthasathy. He actively assisted and planned the execution of money laundering, the agency said.

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