New Delhi: The Enforcement Directorate (ED) on Wednesday said that it has arrested G.S.C. Raju, promoter of Leo Meridian Infrastructure Projects and Hotels Limited (LMIPHL) and his close associate A.V. Prasad in connection with its probe into money laundering case worth Rs 1,768 crore.
The ED said that the accused was arrested after the central financial probe agency filed three cases on the basis of the Central Bureau of Investigation (CBI) report for fraudulently availing loans by the accused in connivance with others from a consortium of banks and then defaulting on the same totalling to Rs 1,768 crore.
The ED said that Raju was arrested under the charges of Prevention of Money Laundering Act (PMLA), 2002.
The official said that the arrested accused were produced before a court which sent them to seven-day ED custody.
On December 30 last year, the ED had attached assets to the tune of Rs 250.39 crore belonging to accused LMIPHL, Raju, his family, his ‘benamis’ and directors of LMIPHL, under the provisions of PMLA.
During investigation it was revealed that a well planned conspiracy was executed by Raju along with his associates at LMIPHL to defraud the banks by creating an illegal layout and selling plots to 315 persons.
“He further mortgaged parts of the already sold lands to the banks to obtain loan for a resort project. Even approach roads were also fraudulently mortgaged to the banks and revenue records were manipulated to cheat the banks and plot owners,” an ED official said.
He claimed that the loans sanctioned by the banks were siphoned off using shell vendors or contractor firms opened in the names of petty employees of LMIPHL.
The ED official further said that part of the diverted funds were diverted back into LMIPHL as investments using Kolkata based ‘jama-kharch’ companies.
The official said that during probe it was found that more than 33 shell companies and bogus share capital and share premium book entries in the balance sheets of LMIPHL were created by Raju with complicity of certain chartered accountants and they used bogus equity to fraudulently show margin money and to improve the debt-equity ratio of LMIPHL to cheat the banks for giving huge loans for which the company was otherwise not eligible.
The ED office further said that Raju had also created large number of fake vendor or contractor firms to siphon off the sanctioned loans, under the guise of bogus invoices and bogus provision of material and services.
“As part of the conspiracy, a large portion of diverted loan funds were cyclically rotated back into LMIPHL to create bogus exaggerated capital works in progress and in turn bogus fixed assets.”
The official said that it was done to cheat the banks into giving more loans and to match the asset side of balance sheets with the liability side.
“By using bogus capital equity, bonus shares taken on fake balance sheets, Raju and his family became owner of 95 per cent of the company without any investment,” the ED official said.