ED uncovers alleged CSR fund laundering racket involving donations from 40 PSUs, banks

The Enforcement Directorate (ED) has uncovered an alleged bribery racket involving senior executives of at least 40 public sector undertakings and government banks, as well as some corporate houses, in connection with the alleged diversion and laundering of hundreds of crores of rupees in corporate social responsibility (CSR) funds.

The funds were allegedly routed through several charities promoted by Dharmendra Kumar Chandradev, a Class XII dropout who, according to the agency, impersonated a medical doctor for nearly three decades.

According to the ED, Chandradev received CSR contributions through multiple trusts set up to facilitate the laundering of funds meant for charitable purposes and eligible for tax exemptions. The money was allegedly returned in cash to the "donors" after deducting a commission. The alleged racket involved corporate houses, hospitals, public sector companies and government banks, with senior executives of PSUs allegedly receiving bribes for facilitating the release of CSR funds.

On October 1, the central agency conducted searches at eight locations across Maharashtra, West Bengal, Gujarat and Delhi-NCR in connection with the alleged bogus donation cases.

During the searches, the agency recovered various pieces of evidence and transaction details involving PSU executives and corporate hospitals. It also seized Rs 21 lakh in unaccounted cash.

"The CSR mechanism was utilised as a conduit for conversion of accounted funds into unaccounted cash. Funds amounting to Rs 200 crore have been routed through the above mechanism," the ED estimated based on its preliminary investigation.

The agency further said its investigation found that CSR contributions made by corporate houses were "returned substantially in cash" to the contributors after a small commission was deducted.

The searches also uncovered a network of agents and intermediaries allegedly responsible for directing CSR funds to the trusts. The funds were subsequently routed through shell entities controlled by market operators. Most of these entities have also been flagged in several GST fraud investigations, the agency said.

"At least 40 PSUs and public sector banks across the country have provided CSR donations to the trusts operated by the accused. Several projects were only partially executed or not executed in proportion to the funds received, while vendor bills were inflated and excess funds routed through bogus or shell entities. Kickbacks and commissions were allegedly paid to intermediaries facilitating the CSR funding," the ED said.