Mumbai: The Enforcement Directorate on Tuesday booked the promoter of Hyderabad-based GVK group G Venkata Krishna Reddy, his son G Venkata Sanjay Reddy, and others under the Prevention of Money Laundering Act (PMLA).
This is based on the FIR filed by the Central Bureau of Investigation (CBI) on June 27 over alleged money laundering scam worth about 705 crores by the GVK group and other foreign entities involved in Mumbai International Airport Limited (MIAL).
The MIAL is formed as a Public-Private Partnership (PPP) in 2006 between the Airports Authority of India (AAI) and the GVK group’s GVK Airport Developers, with a majority stake of 50.5% owned by the GVK group.
An Operation, Management and Development Agreement (OMDA) was signed between AAI and other MIAL partners. The 2006 agreement also states that AAI shall receive an annual fee of 38.7% of their revenue and that the governing body shall have the first right of revenue.
Funds siphoned, bogus contracts signed says CBI.
The CBI case alleges that the accused persons for inflating the expenditure of MIAL by means of bogus contracts, underreported revenues, misuse of reserves by the holding company, allowing premium retail spaces to family and relatives at lower rates, booking “exuberantly expensive” air and train travel for employees and families of those close to GVK Holdings.
Besides, the FIR states that the accused also allegedly misused surplus funds of Rs 395 crores to create Fixed Deposit Receipts in Hyderabad-based branches of other nationalized banks and availed loans/ overdraft facilities.
These funds were used for the benefit of the GVK group companies at the expense of MIAL causing wrongful loss to AAI.
The FIR thus was booked on the GVK group promoters and other unknown officials of AAI for causing loss to the government exchequer by fraudulently siphoning the funds in different ways.
The FIR has been booked under multiple sections of the Indian Penal Code (IPC), including that of fraud, cheating, forgery, and criminal misconduct between 2012 and 2018. The irregularities were allegedly worth 705 crores, including AAI’s loss of 310 crores.
On July 1, CBI carried out preliminary investigations in Mumbai and Hyderabad offices of the GVK group and MIAL. The ED is known to have registered an Enforcement Case Information Report (ECIR) over the weekend and would probe into the case soon.