The Directorate of Execution (ED) announced on Saturday that it had seized shares worth ??700 crore held directly and indirectly by the jailed chairman of the company, C Parthasarathy, after raiding six Karvy Stock Broking Limited (KBSL) sites.
The raids were carried out as part of a money laundering investigation against Parthasarathy and his associates, the agency said. Parthasarathy, who was arrested last month, is being held at Chanchalguda prison in Hyderabad.
In a statement, the agency said the searches were carried out on September 22 at six locations in Hyderabad and at various premises of the Karvy group of companies, related entities and residential premises of C Parthasarathy.
“Several prosecution evidence in the form of property documents, personal diaries, electronic devices, email dumps etc. have been seized and are being analyzed,” he said.
The shares of the Karvy group are held “directly and indirectly” by CMD Comandur Parthasarathy, his sons Rajat Parthasarathy and Adhiraj Parthasarathy, and their entities.
“It is reliably learned that C Parthasarathy is 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 has issued a freezing order on September 24 and the estimated value of these shares has been reached ??700 crore according to the valuation for the year 2019-2020, “he said.
The ED case, filed under the provisions of the Money Laundering Prevention Act (PMLA), is based on a Telangana Police FIR alleging that the group had “unlawfully pledged the securities of its clients and took out a loan from ??329 crore and hijacked the same “.
“Another FIR was registered by the Hyderabad Central Police Station for defrauding IndusInd Bank to the tune of ??137 crore and another FIR were registered by Cyberabad police authorities for defrauding ICICI bank to the tune of ??562.5 crores, ”he said.
The ED clubbed all of these FIRs as part of their investigation and also recorded Parthasarathy’s statement in prison.
The Karvy group, under the leadership of C Parthasarathy, had committed “flagrant irregularities” and all illegally contracted loans became NPA, the agency said.
We are learning that more FIRs are registered by other banks and also by individual shareholders / investors, the ED said.
The total loan proceeds taken from several banks using the same operating mode is approximately ??2,873 crores, he said, adding that the NSE and SEBI were also investigating the affairs of the company.
The agency said its investigation revealed that KSBL “failed to report” the participatory custodian or DP account no. 11458979, named KARVY STOCK BROKING LTD (BSE), in filings made from January to August 2019 with regulators / stock exchanges.
“KSBL fraudulently transferred the 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, bank IndusInd, Axis Bank, etc..). “
“The securities in the aforementioned KSBL DP account were actually owned by the clients who were / are the rightful owners of the pledged securities,” the agency said, adding that the group had no legal right to pledge over these titles. and generate funds.
“The amount of these loans contracted by the KSBL on the illegal pledging of shares is of the order of ??2,873 crores. KSBL credited the funds raised by pledging client securities to 6 of its own bank accounts (securities broker’s own account) instead of the “securities broker-client account” and furthermore did not report these 6 own bank accounts (own account of a securities broker) held with various private banks at the Sebi ”, he alleged.
Prima facie, said the ED, a net amount of ??1,096 crore was transferred by KSBL to its group company – Karvy Realty (India) Ltd – between April 1, 2016 and October 19, 2019.
He accused KSBL of carrying out “large-scale business activities on behalf of 9 companies, including Karvy Consultants Limited (KCL), which is a Karvy group company, and 8 other shell companies, under the guise of doing business. assurance “.
“Several rupee crores have been diverted for the acquisition of real estate properties through the group company, KRIL, as well as to other companies in the group.”
It also appeared that recently, deletion of files and e-mails from computer servers using anti-legal tools had been carried out, under the instructions of C Parthasarathy, ”he said.
Analysis of the bank statements of these companies revealed that there is a “large turnover of fund values” between the companies of the Karvy group and the bank accounts of certain shell companies.
(With contributions from the agency)