The Enforcement Directorate (ED), Chennai zone, has filed a prosecution complaint against Bhoopesh Kumar Jain, managing director of Kanishk Gold Pvt. Ltd. (KGPL) and others involved in money laundering offences, before the designated Special Court. Further investigations in this case are under way.
According to the ED, based on a complaint received from the general manager of the SBI, Chennai, the Central Bureau of Investigation – Bank Fraud and Securities Cell (CBI-BF&SC), Bengaluru, has registered an FIR against Kanishk Gold Pvt. Ltd (KGPL), Chennai, its directors and auditors and initiated investigations.
The allegation against KGPL was that they availed of huge credit facilities from the consortium of the banks on the primary security of raw materials, semi finished goods, finished goods, stores, spares, showing huge stocks but it was later realised that stock statements were fudged and on inspection by the banks in May 2017, it was found that there were no stock of gold or jewellery.
Only on paper
The stock audit also revealed that many of the transactions were only on paper. The stock statements were fudged with the help of chartered accountants and the loans were sanctioned without due diligence.
A statement from K.S.V.V. Prasad, joint director, ED-Chennai, said that forensic audit revealed misrepresentation/falsification of records, diversion of funds and disposal of the stocks by the company and the estimated loss to the banks due to the above fraud works out to ₹824 crore. During investigations under Prevention of Money Laundering Act (PMLA), 2002, falsification of records was admitted – the reported stock was about 3,000 kg in 2017 but the actual stock was found to be nil. In the last few months, the ED froze land, building and plant and machinery worth ₹48 crore belonging to KPGL at Maduranthagam taluk. Fixed deposits, available with connected jewellers, worth ₹143 crore was provisionally attached.
Bhoopesh, who is currently under judicial custody at Puzhal prison in Chennai, had purchased immovable properties both in his name and in the name of the company, out of the bank borrowings, which were originally meant for his company.
The same immovable properties were subsequently mortgaged to the banks in consortium for availing more credit facilities. Accordingly, 14 immovable properties totally valued at ₹138 crore, were also been attached provisionally under PMLA.