Hyderabad: The Enforcement Directorate has provisionally attached 105 immovable properties and other assets worth Rs 96.21 Crore belonging to Madhucon Group of companies and its directors and promoters in a money laundering case against M/s Ranchi Expressway Ltd Bank Fraud, under the provisions of Prevention of Money Laundering Act 2002.
The properties of the Hyderabad based road construction company are based in Telangana, West Bengal and Andhra Pradesh States. The money laundering case was booked against Ranchi Expressways Limited, a Madhucon Group of company entity and its directors Kamma Srinivasa Rao, S Nama Seethaiah and Nama Prithvi Teja.
“The PMLA investigation was initiated in this case on the basis of a CBI FIR registered on 12 March 2019 by CBI ACB Ranchi, registered against M/s Ranchi Expressways Limited (A Madhucon Group Company) and its Directors. Subsequently, CBI filed the charge sheet before the Special Judge for CBI cases, Ranchi against M/s Ranchi Expressways Limited and others,” the ED official said in a statement.
Further, it said that in this case, NHAI had awarded project of the four-laning of NH-33 from 114 Km to 277.50 KM (approximately 163.50 KM) on the Ranchi-Rargaon-Jameshdpur section on an annuity basis on design, built, finance, operate and transfer (DBFOT) pattern to M/s Madhucon Project Limited on 18 March 2011.
“A Special Purpose Vehicle (SPV) M/s Ranchi Expressway Limited was incorporated by Madhucon Group, to execute this project. Kamma Srinivasa Rao, Nama Seethaiah and Nama Prithvi Teja were the founder directors of the said company and Madhucon Project Limited was the Engineering Procurement Construction (EPC) contractor of the project. Madhucon Group couldn’t complete the project despite availing the full loan amount, and subsequently, their contract was terminated and a FIR was booked based on the directions of the High Court which were in turn based on the reports of SFIO and NHAI,” the ED said.
The Enforcement Directorate conducted searches, recorded the statements of multiple Bankers, forensic auditors, engineers, subcontractors and promoters of Madhucon Group and conducted a fund trail investigation, added the press release from the ED.
During the search operations in June 2021, ED seized incriminating evidences and unaccounted cash of 34,00,000/- was also found and seized from the residential premises of Madhucon Group’s Chairman Nama Nageshwar Rao, who is the Member of Lok Sabha from Khammam parliamentary constituency.
“ED investigation revealed that M/s Ranchi Expressways Limited represented by its directors & promoters obtained loans of Rs 1030 Crore (approx) from the consortium of banks led by Canara Bank. Madhucon Group did not utilize the entire loan amount for its stated purposes, and diverted it to its associated entities and utilized it for other works and also directly siphoned off the loans by giving bogus works to its related shell entities,” the ED officials said.
It further stated that the work on the ground suffered and they could not complete the work despite drawing the entire loan amount. They also managed the maintenance reports and work progress reports to falsely claim higher expenses.
Financials of the Group were not doing well for many years and after winning the tender for Ranchi Jamshedpur Project, the Madhucon Group created a SPV namely M/s REL and did round tripping of loan funds to show bogus promoter’s investment for obtaining the very first drawdown of the loan from the bank.
“Therefore, it is clear that from the very beginning, the Madhucon Group was involved in creative drawings of the Accounts to cheat the Banks/NHAI. Ultimately, Madhucon Group could not repay the loans and the account turned into Non Performing Asset. Another key finding of ED probe is that the LIE {Lender’s Independent Engineer} chosen for this project was a completely related party of Madhucon Group and thus it was not independent and it consistently issued wrong reports favorable to the Madhucon Group,” stated the ED.
According to the agency, the Madhucon Group promoters siphoned off the loan funds of this project by taking the entire EPC Contract from its SPV. They then took huge mobilization and material advances, but instead of using those advances for the work, instead used it in their other projects.
“Also, direct cash of Rs 75.50 Crore was generated by paying money and then receiving back the amount through six shell entities (M/s. Usha Projects, M/s Shree BR Visions, M/s. Sri Dharma Saastha Constructions, M/s. Sree Nagendra Constructions, M/s. Ragini Infrastructure and, M/s. Varalakshmi Constructions) which were completely under the control of their Chairman Nama Nageshwara Rao and Mr Nama Seethaiah,” the ED officials stated.
Further investigation is on.
