ED freezes shares worth Rs 700 Cr of Hyderabad-based Karvy group
The Law Enforcement Department froze Rs 700 crore shares of Hyderabad-based Karvy Group after learning that its Chairman and CEO (CMD) C Parthasarathy was trying to transfer them to his other companies through private agreements with the aim of “preserving the product.” from crime to further investigation “.
On September 22, ED searched six sites linked to Karvy Stock Broking Limited (M / s KSBL) under the Prevention of Money Laundering Act (PMLA). Subsequently, ED issued an order to freeze the shares of the Karvy group held directly and indirectly by Comandur Parthasarathy, his sons, Rajat Parthasarathy and Adhiraj Parthasarathy, and their entities in order to protect the proceeds of crime.
ED raided various premises of the Karvy group of companies, related entities and the residential premises of C Parathasarathy. During the search, several prosecution evidence in the form of property documents, personal diaries, electronic devices, e-mail dumps, etc. were seized.
ED said it is reliably learned that C Parthasarathy was trying to get rid of his shares in the group companies through private deals and therefore, in order to preserve the proceeds of crime until further investigation. ,
ED issued a freezing order on September 22. ED said the estimated value of these shares is Rs. 700 Crore according to the valuation for the year 2019-20.
ED opened a money laundering investigation based on FIRs recorded by Telangana police over HDFC Bank complaint alleging that M / s KSBL illegally pledged the securities of his clients and took out a loan of Rs 329 Crore and hijacked the same.
Another FIR was registered by Central Crime Station, Hyderabad Police, for defrauding IndusInd Bank to the tune of Rs 137 Crore. ED said another FIR was registered by police authorities in Cyberabad, Hyderabad, for defrauding ICICI bank to the tune of Rs 562.5 crore.
ED said that the KSBL, under the leadership of C Parthasarathy, had committed serious irregularities and that all illegally contracted loans became NPAs. We learn that more FIRs are registered by other banks as well as by individual shareholders / investors.
“The total loan proceeds taken from several banks using the same modus operandi is approximately Rs 2,873 Crore. NSE and SEBI are also investigating the affairs of KSBL. ED is investigating under the PMLA against Karvy Group of Companies for their involvement in the money laundering offense to the tune of Rs 2,873 Crore, ”ED said.
During the investigation, it appeared that KSBL had not declared the participatory deposit account) DP no. 11458979 from Karvy Stock Broking Ltd (BSE) in deposits made from January 2019 to August 2019 with regulators / exchanges.
In addition, KSBL fraudulently transferred shares belonging to its clients to its own Demat account (which is not disclosed to the stock exchanges) and pledged the shares held in these accounts with lenders / banks (HDFC Bank, ICICI Bank, IndusInd Bank, Axis Bank, etc.). The securities in the aforementioned DP account of KSBL were actually owned by the clients who were / are the lawful owners of the pledged securities. Therefore, KSBL had no legal right to constitute pledge on those securities and generate funds, ”ED said.
ED said the amount of these loans taken by KSBL from the illegal pledging of shares is in the range of Rs 2,873 crore. KSBL credited the funds raised by pledging client securities to 6 of its own bank accounts (“Stock Broker-own Account”) instead of the “Stock Broker-Client Account”.
“He did not report these 6 own bank accounts (” Stock Broker-own Account “) held with various private banks, to SEBI. Prima facie, a net amount of Rs 1096 crore was transferred by KSBL to his company of ieM / s group Karvy Realty (India) Ltd. (KRIL), between April 1, 2016 and October 19, 2019, ”ED said.
In addition, KSBL conducted large-scale business activities on behalf of 9 companies which included M / s Karvy Consultants Limited (KCL), which is a Karvy group company, and 8 other shell companies, under the guise of doing business in ‘assurance.
“During the investigation carried out within the framework of the PMLA, it also emerged that several crores of rupees had been misappropriated for the acquisition of real estate via the group company, KRIL, as well as to other companies in the It also emerged that recently the deletion of files and emails from computer servers using anti-legal tools had been carried out under the instructions of C. Parthasarathy, ”ED said.
ED said analysis of the bank statements of these companies revealed that there is a significant turnover of funds between the Karvy group of companies and the bank accounts of the shell companies. Earlier, ED recorded C. Parthasarathy’s statement at Chanchalguda prison.