The Enforcement Directorate (ED) has attached movable and immovable assets worth ₹110.70 crore in a money laundering case registered against Karvy Stock Broking Limited (KSBL), its chairman Comandur Parthasarathy and others in the ₹2,800-crore Karvy scam, said the agency on July 30. The total attachment of ₹2,095 crore has been done in the case.
The newly attached properties are in the form of land parcels, buildings, shareholdings, cash, foreign currency and jewellery. Mr. Parthasarathy and Group chief financial officer (CFO) G. Hari Krishna were earlier arrested by the ED and they are currently out on bail.
The ED’s investigation is based on the First Information Reports (FIRs) filed by the Hyderabad Police on the complaints of investors and banks, which alleged that the Karvy group had availed large amounts of loans by illegally pledging its clients’ shares worth about ₹2,800 crore. The loan accounts later turned non-performing assets (NPA) after the release of the client’s securities as per the orders of National Stock Exchange (NSE) and the Securities and Exchange Board of India (SEBI).
Subsequently, the loans were allegedly diverted by the high-ranking functionaries working under the overall control of the chairman-cum-managing director. They were transferred to related companies like KDMSL and KRIL, which was set up for the real estate ventures.
The money was routed through multiple defunct non-banking finance companies (NBFCs) to KFSL-NBFC to clear its bad debts and large chunks of loan proceeds were transferred to shell insurance companies which did massive speculative share trading with the KSBL as the stock broker and ostensibly suffered massive losses, as alleged.
A very complex web of financial transactions, using several shell entities and NBFCs, was created. Large amounts of the proceeds of alleged crime were shown as investments, share capital, short term advances or loans to the group companies. It resulted in an enhancement of the value of the subsidiary entities. “Now the accused are trying to sell these subsidiary businesses at a profit to yield indirect windfall gains to the main accused,” said an official.
It is alleged that Mr. Parthasarthy had made arrangements through his group companies to extend financial benefits to his sons, Rajat and Adhiraj Parthasarthy, on the pretext of salary and reimbursement of household expenses. Investigations revealed that KDMSL managing director V. Mahesh, was a close associate of Mr. Parthasathy and he actively assisted and planned the execution of money laundering operations, the agency has alleged.
