Bank loan fraud ED arrests MD of Hyderabad firm
New Delhi Jan 18 PTI The promoter and managing director of a Hyderabad-based company has been arrested under the anti-money laundering law in connection with a bank loan fraud of Rs 402 crore where a consortium of public sector banks was allegedly cheated the Enforcement Directorate ED said on TuesdayAvasarala Venkateswara Rao of Servomax India Private Limited SIPL was arrested on MondayHe was produced before a special court that deals with cases lodged under the Prevention of Money Laundering Act PMLA on Tuesday The court sent Rao to judicial custody for 14 daysThe ED in a statement issued here said Rao was arrested for indulging in the offence of money laundering and for causing a loss of around Rs 402 crore to a consortium of public sector banks by indulging in various fraudulent practicesThe ED case of money laundering was filed after taking cognisance of a 2018 FIR lodged by the Central Bureau of Investigation CBI against the accusedThe ED said SIPL had taken loans from the consortium of banks and Rao was the promoter-cum-key managerial person who was responsible for the entire business operationsHe indulged in fraudulent transactions and the loan amounts were not repaid and the consortium of banks suffered an NPA of Rs 402 croreSIPL had circulated loan amounts to various related entities to inflate its books of accounts to become eligible for higher loans and had issued LCs letters of credit to related entities without any real purchase of goods and which ultimately devolved causing losses of Rs 267 crore to the banks the agency saidThe ED said its probe established that Rao indulged in benami transactions and diverted loan funds for personal benefitsRao used a web of more than 50 entities to route proceeds of crime and layer the sameHe was non-cooperative during the investigation and was not supplying documents of his own business entities on one pretext or the other the ED allegedOnce the loan accounts became non-performing assets NPAs Rao used his own shell entity with his employee as its controlling director to initiate the CIRP corporate insolvency resolution process by fraudulently declaring it to be a creditor by passing bogus journal entriesHe even managed to get his own person appointed as IRP for some time He has also managed to retain the brand name of Servomax illegally and even during the CIRP he controlled the website of the company and diverted work orders to his related entities the ED alleged PTI NES RC
New Delhi Jan 18 PTI The promoter and managing director of a Hyderabad-based company has been arrested under the anti-money laundering law in connection with a bank loan fraud of Rs 402 crore where a consortium of public sector banks was allegedly cheated the Enforcement Directorate ED said on TuesdayAvasarala Venkateswara Rao of Servomax India Private Limited SIPL was arrested on MondayHe was produced before a special court that deals with cases lodged under the Prevention of Money Laundering Act PMLA on Tuesday The court sent Rao to judicial custody for 14 daysThe ED in a statement issued here said Rao was arrested for indulging in the offence of money laundering and for causing a loss of around Rs 402 crore to a consortium of public sector banks by indulging in various fraudulent practicesThe ED case of money laundering was filed after taking cognisance of a 2018 FIR lodged by the Central Bureau of Investigation CBI against the accusedThe ED said SIPL had taken loans from the consortium of banks and Rao was the promoter-cum-key managerial person who was responsible for the entire business operationsHe indulged in fraudulent transactions and the loan amounts were not repaid and the consortium of banks suffered an NPA of Rs 402 croreSIPL had circulated loan amounts to various related entities to inflate its books of accounts to become eligible for higher loans and had issued LCs letters of credit to related entities without any real purchase of goods and which ultimately devolved causing losses of Rs 267 crore to the banks the agency saidThe ED said its probe established that Rao indulged in benami transactions and diverted loan funds for personal benefitsRao used a web of more than 50 entities to route proceeds of crime and layer the sameHe was non-cooperative during the investigation and was not supplying documents of his own business entities on one pretext or the other the ED allegedOnce the loan accounts became non-performing assets NPAs Rao used his own shell entity with his employee as its controlling director to initiate the CIRP corporate insolvency resolution process by fraudulently declaring it to be a creditor by passing bogus journal entriesHe even managed to get his own person appointed as IRP for some time He has also managed to retain the brand name of Servomax illegally and even during the CIRP he controlled the website of the company and diverted work orders to his related entities the ED alleged PTI NES RC
