After CBI, ED set to charge GVK Group for Mumbai airport ‘irregularities’
The Enforcement Directorate (ED) is set to charge promoters of the GVK Group of companies for alleged money laundering, sources told Business Standard after the Central Bureau of Investigation (CBI) accused them of alleged irregularities to the tune of Rs 705 crore in running the Mumbai airport.
Mumbai International Airport Ltd (MIAL) is a joint venture between GVK, state-run Airport Authority of India (AAI) and foreign entities. AAI entered into an agreement with the two others for upgradation and maintenance of the Mumbai airport.
“We are examining the CBI case and will be booking the accused under the Prevention of Money Laundering Act (PMLA) for alleged siphoning of funds through unfinished contracts and diverting the surplus funds of the MIAL for meeting personal expenses, said a senior ED official.
The CBI on June 27 registered a case against GVK group chairman GVK Reddy, MIAL and AAI officials for cheating and criminal conspiracy that allegedly caused loss to the tune of about Rs 1,000 crore to the government, said sources.
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The CBI, in its first information report, categorised its allegations into four parts including inflating the expenditure of MIAL, underreporting revenue earnings of MIAL and using the same for meeting personal expenses of GVK promoters. It alleged the funds were siphoned off by showing bogus completion of work and misusing the reserve funds of MIAL.
According to CBI, AAI gave 200 acres of underdeveloped land to GVK for redevelopment. MIAL then allegedly gave “bogus contracts” to companies and siphoned off over Rs 310 crore. The GVK group allegedly used MIAL funds by entering into agreements with a company owned by the promoters’ relatives. MIAL funds were allegedly used to book train and flight tickets and hotel rooms group employees not connected to the airport company.
On misusing reserve funds, the CBI FIR said that Rs 395 crore was used by GVK to finance their other group companies. “They fraudulently created forged board meeting resolutions of MIAL authorizing to keep the reserve surplus funds of MIAL as fixed deposit receipts (FDRs) with PSU banks at Hyderabad MIAL is Mumbai based company but they chose to deposits the funds in the form of FDRs with Hyderabad based branch of Bank of India, said the CBI in its probe report.
GVK Group raised loans OD facilities against these FDRs and used these funds for the benefit of their Hyderabad based GVK group companies at the expense of MIAL. By using the similar modus operandi, GVK group has also misused the surplus funds of MIAL by creating FDRs in Hyderabad based branches of other nationalized banks and availed loans OD facilities.
On inflating the expenditure of MIAL through diversion of funds, CBI report said the promoters of GVK Group in MIAL have embezzled more than Rs. 100 crore of MIAL by resorting to inflating the expenditure of MIAL. They shifted the staffs of the head office of GVK Group at Hyderabad and the employees of their group companies on to the pay rolls of MIAL, Mumbai.
