Enforcement Directorate Seizes Assets Worth Rs. 55.73 Crore in Major Bank Fraud Investigation
(Judicial Quest News Network)
The Directorate of Enforcement (ED) in Hyderabad has provisionally attached movable and immovable properties valued at Rs. 55.73 Crore under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, as part of its investigation into a bank fraud case involving M/s VMC Systems Limited.
The ED’s actions follow an FIR filed by the Central Bureau of Investigation (CBI) in Bangalore under various sections of the Indian Penal Code (IPC), 1860, against M/s VMC Systems Limited, its directors, and other associated entities for defrauding Punjab National Bank (PNB) and other banks to the tune of Rs. 539.67 Crore.
ED’s investigation uncovered that VMC Systems Ltd. approached PNB and State Bank of India (SBI) in 2009 for partial financing of its working capital requirements. Between 2009 and 2012, VMC Systems Ltd. obtained credit facilities totaling Rs. 1673.52 Crore from a consortium of banks, with SBI serving as the Lead Bank. By 31st December 2013, the PNB account of VMC had become a Non-Performing Asset (NPA), followed by other bank accounts. As of 31st March 2018, the total loss to all the banks was estimated at Rs. 1745.45 Crore.
The ED’s investigation revealed significant irregularities, including falsified accounts and the diversion of credit facilities to multiple entities linked to VMC Systems Ltd., leading to the generation of illicit proceeds. Directors from these entities confirmed the fraudulent activities during the investigation, indicating that funds were funnelled through entities beneficially owned and controlled by individuals connected to VMC Systems Ltd. and its promoters.
Following the NPA designation of its accounts, VMC Systems Ltd. continued its unlawful activities by transferring funds, both through its own accounts and those of its associates, to entities under the control of Mrs. Himabindu and V Satish Kumar.
These entities, often managed by dummy directors who were relatives or acquaintances, acted as conduits for illicit fund transfers. Once received, these funds were laundered through a series of sham transactions to obscure their origins.
Further investigation revealed that V Satish Kumar and V Madhavi (Mrs. Himabindu’s sister) were implicated in wire fraud, tax evasion, and money laundering conspiracy by the US District Court of Western District of Washington at Seattle, based on a lawsuit filed by Kyko Global Inc., USA. Kyko Global was awarded $133,000,000 due to Prithvi Information Solutions Ltd.’s fraudulent conduct and illegal racketeering activity, leading to a subsequent settlement agreement involving the transfer of assets to Kyko Global.
The ED’s provisional attachment includes various assets such as a residential house owned by V Satish Kumar in Jubilee Hills, Hyderabad; agricultural land in Anajpur Village, Rangareddy, acquired in the name of Rajesh Kotha, a benami and associate of V Satish Kumar; a tea estate covering 580.77 acres in Cacher district, Assam, valued at Rs. 11.73 Crore; and receivables from Bharat Sanchar Nigam Limited (BSNL) totalling Rs. 37.03 Crore.
