ED raids in four States in bogus CSR donation case
The Enforcement Directorate on Wednesday conducted searches in four states as part of an investigation linked to an alleged Rs 200 crore bogus Corporate Social Responsibility (CSR) donation racket, officials said.
They said a total of eight locations in Maharashtra, West Bengal, Gujarat and Delhi-NCR were covered as part of the action.
The premises belong to market operators, trustees, equipment suppliers and middlemen, officials said.
The agency suspects that Trusts were created and used as vehicles for obtaining CSR donations, primarily from Public Sector Undertakings (PSUs). It estimates that CSR funds worth Rs 200 crore were routed through this mechanism.
The ED case registered under the Prevention of Money Laundering Act (PMLA) stems from an FIR filed at the Juhu Police Station in July.
The FIR alleged that a man named KC Singh used the title of ‘Doctor’ despite not possessing any recognised medical qualification or registration with a recognised medical body.
It is alleged that the man operated a network of charitable trusts working in the healthcare sector through which “substantial” CSR funds were mobilised from PSUs and private corporates.
Officials said the modus operandi detected in this case found that projects were pitched to the PSUs in the name of legitimate CSR initiatives; however, they were either only partially executed or not executed in proportion to the funds received.
Vendor bills were allegedly inflated, and the excess amounts were siphoned off through shell companies, and kickbacks or commissions were paid to middlemen and brokers who facilitated the procurement of CSR funds or brokered the transactions, officials said.
It was also found that CSR contributions received from private entities were allegedly returned substantially in cash to the contributing entities after retaining a small commission.
Thus, they said, the CSR mechanism was allegedly misused as a conduit to convert accounted funds into unaccounted cash, with the trusts retaining only a nominal percentage as commission.
