The Enforcement Directorate (ED) has identified additional assets and has provisionally attached properties in the form of lands, buildings, share holdings, cash, foreign currency and jewellery worth Rs 110 crore in the money laundering investigation against Karvy Stock Broking Ltd (KSBL), its Chairman Comandur Parthasarathy and others.
Earlier, the ED had attached assets worth Rs 1,984.84 crore in this case. C Parthasarathy and Group CFO G Hari Krishna were arrested by ED and are presently enlarged on bail. The total attachments in the case stand at Rs 2,095 crore.
The ED initiated money laundering investigation on the basis of FIRs filed by the CCS Hyderabad Police, on the complaints of lending Banks who complained that the Karvy Group had availed large amounts of loans by illegally pledging their clients’ shares worth about Rs 2,800 crore. The said loans turned into non-performing asset (NPA) after the release of the client's securities as per the orders of National Stock Exchange (NSE) and Securities and Exchange Board of India (SEBI).
Subsequently, the loans were diverted from the stated purpose by a set of high ranking functionaries working under the overall control of the CMD. Funds were diverted to related companies like – KDMSL and KRIL— which were set up for real estate ventures. The diverted loan funds were routed via multiple defunct Non Banking Financial Companies (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 in a statement.
“Very complex web of financial transactions, using several shell entities and NBFCs. Large amounts of proceeds of crime have been 'invested' by infusing in the form of investments/share capital/short term advances/loans to group companies. This has 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 said in a statement.
Parthasarthy had made arrangements through his group companies to pay financial benefits to his sons Rajat and Adhiraj in the garb of salary and reimbursement of household expenses to project the “proceeds of crime” as untainted money in the hands of the family members.
Further, investigation revealed that V Mahesh, MD of KDMSL, is a close associate of Parthasarathy and he actively assisted and planned the execution of money laundering operations, the agency added.
