Chennai, Sep 4 (IANS) In multi-city searches, the ED identified illegal assets and froze bank accounts as part of Rs. 637.58 crore bank loan fraud and related money laundering by a company identified as Arvind Remedies, an official said on Thursday.

The ED, Chennai Zonal Office, conducted searches on September 2 and 3 at various locations in Chennai, Kancheepuram, Goa, Kolkata and Mumbai, and inspected the premises of promoters, dummy Directors and key persons of Arvind Remedies under the PMLA, 2002.

During the searches, various incriminating documents, digital evidence and property-related documents have been seized, and Rs 15 lakh shares of listed and unlisted companies were frozen, said the ED.

It said the search operations resulted in the identification of certain assets [immovable assets and shares] held by the promoters in the name of family members/ distant relatives, etc, to prevent the banks from recovering loans/ assets.

About 15 Lakh shares of various listed as well as unlisted companies held by promoters have been frozen, said the ED.

During the search operations, dummy Directors accepted that they were not aware of the affairs of the company, and they were paid monthly salaries in cash by brokers. Such dummy Directors signed the cheques of the shell companies for nominal commissions without knowing the purpose, said the ED.

The ED initiated investigations under PMLA based on the FIR registered by CBI.

The FIR was registered based on the complaint of Punjab National Bank (PNB) wherein it was alleged that Arvind Remedies and its promoter, Arvind B Shah and others cheated the consortium of banks to the extent of Rs 637 Crore.

The PNB was the leader of consortium of banks consisting of various banks namely United Bank of India, State Bank of India, IDBI Bank, Allahabad Bank, Karur Vysya Bank, Indian Overseas Bank, Corporation Bank which have extended various credit facilities (cash credit, term loan and non-fund based) to the tune of Rs 704.75 crore against which Rs 637.58 crore was outstanding as per the books of the banks as on September 30, 2016. All the bank loan accounts had been declared as NPA.

The ED investigation revealed that the bank funds were siphoned off through shell entities controlled by the promoters, the ED said in a statement.

Many dummy Directors were appointed by the Promoter Arvind B Shah through brokers to manage the shell companies.

The bank funds were rotated among the shell companies to show higher turnover to the banks and thereby induced the banks to lend more funds. The rotation of funds was also made to artificially rig the share price and pocket the gains. A certain part of the funds was also diverted to acquire assets. The assets provided as security to the banks were disposed of without the knowledge of the banks, and thereby the banks were deprived of the assets to enforce recovery of the loans, the ED said.

–IANS

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