The Enforcement Directorate (ED) has provisionally attached 105 immovable properties and other assets worth Rs 96.21 crore belonging to Madhucon Group of companies, its directors and promoters in a money laundering case against Ranchi Expressway Ltd Bank Fraud on money laundering charges.
The ED has identified land assets of Rs 88.85 crore at Hyderabad, West Bengal and Visakhapatnam, Prakasham, Krishna District and movable assets of 7.36 crore including shareholding of the promoters in Madhucon Projects Ltd, totalling to Rs 96.21 crore and has issued the Provisional attachment order on Friday to preserve the ‘proceeds of crime’.
The PMLA investigation was initiated in this case on the basis of a CBI FIR registered on March 12, 2019 by the Anti-Corruption Branch, CBI, Ranchi, against Ranchi Expressways Limited (A Madhucon Group company) and its Directors.
Subsequently, the CBI filed chargesheet on December 30, 2020 before the Special Judge for CBI cases, Ranchi against Ranchi Expressways Ltd. and others.
In this case, the National Highways Authority of India (NHAI) had awarded project of four-laning of NH-33 from 114 Km to 277.50 KM (approximately 163.50 KM) on Ranchi-Rargaon-Jameshdpur Section on annuity basis on design, build, finance, operate and transfer (DBFOT) pattern to Madhucon Project Ltd. on March 18, 2011.
A Special Purpose Vehicle (SPV) Ranchi Expressway Ltd. was incorporated by Madhucon Group, to execute this project. Kamma Srinivasa Rao, Nama Seethaiah and Nama Prithvi Teja were the founder directors of the said company and Madhucon Project Ltd. was the Engineering Procurement Construction (EPC) contractor of the project.
The Madhucon Group couldn't complete the project despite availing the full loan amount, and subsequently, their contract was terminated and an FIR was registered based on the directions of the High Court which were in turn based on the reports of SFIO and NHAI.
The ED conducted searches, recorded the statements of multiple bankers, forensic auditors, engineers, sub-contractors and promoters of Madhucon Group and conducted a fund trail investigation.
During the search operations in June 2021, the ED seized incriminating evidence and unaccounted cash of Rs 34,00,000 from the residential premises of Madhucon Group's Chairman Nama Nageshwar Rao.
The ED investigation revealed that Ranchi Expressways Limited represented by its directors and promoters obtained loans of Rs 1,030 crore from the consortium of banks led by Canara Bank.
The Madhucon Group did not utilize the entire loan amount for its stated purposes, and diverted it to its associated entities and utilized it for other works and also directly siphoned off the loans by giving bogus works to its related shell entities.
The work on the ground suffered and they could not complete the work despite drawing the entire loan amount. They also managed the maintenance reports and work progress reports to falsely claim higher expenses.
Multiple inspections by the Forensic Auditors and NHAI have revealed that the on ground progress of the work achieved by Madhucon Group was only 50.24 percent whereas, they had already drawn a loan amount of 90 percent.
Through round-tripping, the Madhucon Group diverted Rs 361.29 crore from the loan funds and received in its accounts.