The Enforcement Directorate has arrested a person in connection with a money laundering case linked to an alleged Rs 750 crore bank loan fraud committed by misusing credit facilities, the central probe agency said on Saturday. It said Sai Chandrasekhar was arrested under the Prevention of Money Laundering Act on Friday following which a local court here sent him to seven days ED custody.
The money laundering case against Chandrasekhar pertains to a probe initiated by the agency againstVirkaran Awasty, Vinod Sirohi and KPMG India Pvt Ltd, it said in a statement. The PMLA case was filed against them after studying an FIR registered by the economic offences wing (EOW) of the Delhi Police on the basis of a complaint received from Hassad Netherlands BV.
Hassad Netherlands BV, a subsidiary of Hassad Food Company, was "induced" by Virkaran Awasty and Ritika Awasty, Directors of Bush Foods Overseas Pvt Ltd, to part with funds amounting to USD 120 million (about Rs 750 crore) by misrepresenting the level of stocks/inventory, the ED alleged. "On the basis of such misrepresentations, the accused persons induced Hassad Netherlands BV to provide corporate guarantee for the outstanding amount of Rs 714 crore of credit facilities availed from consortium of banks.
"Credit facilities were availed by Bush Foods Overseas Pvt Ltd on the basis of non-existent stocks and inventory," the agency claimed. Probe found, it said, Virkaran Awasty along with other directors created bogus stocks by inflating the inventory and fabricating financial statements of the company.
"Bulk transactions of sales and purchases were generated so that Bush Foods could record increased turnover, profit margins and additional stock by generating approximately equal value of sales and purchases in a year. "Artificial profit and artificial stock in the book value of inventory was recorded in the books by showing these bulk sales as domestic sales," it alleged. Chandrasekhar, it said, was an employee of Hassad Foods Company and was part of team which evaluated the transactions.
The agency charged that Chandrasekhar "colluded and conspired" with Virkaran Awasty to "cheat" Hassad Netherlands. "Chandrasekhar had a pivotal role and responsibility in the business transactions between Bush Foods Overseas Pvt Ltd and Hassad Netherlands BV. He also had a key role in negotiations, discussion and due diligence carried out by Hassad on Bush Foods," it said.
Chandrasekhar was paid "illegal gratification" of Rs 20.79 crore by Virkaran Awasty for manipulating the due diligence exercise in favour of Bush Foods Pvt Ltd despite knowing that the credentials of the company were not genuine, the ED alleged. "Chandrasekhar acquired a property located at Indiranagar area of Bengaluru worth Rs 5.8 crore for which amount was transferred by Virkaran Awasty from his company V&R Overseas.
"Chandrasekhar also received Rs 1 crore proceeds of crime in the account of his father and mother from Virkaran Awasty which was spent for medical treatment of his father," it said. Chandrasekhar also got Rs 13.79 crore from Virkaran Awasty in his Dubai-based company Harin Ventures Limited, it said.
The agency said it has attached Chandrasekhar's assets in Bengaluru and Mumbai and bank balances worth Rs 7 crore in the past.