Hyderabad: CCS files chargesheet against Karvy chief in Rs 137 crore loan fraud

HYDERABAD: After nearly three-month investigation into the alleged financial irregularities by Karvy Stock Broking Ltd (KSBL), investigators have found that the company raised Rs 137 crore loan from Indus Bank by pledging shares of its clients and diverted the loan amount to 142 different firms, including 22 subsidiary companies. They also discovered that the stock broking firm allegedly misused money of its clients.
Central Crime Station (CCS), Hyderabad, officers have recently filed a 65-page charge sheet in a Nampally court against Karvy, represented by its chairman and managing director (CMD) C Parthasarathy and eight others, based on the complaint lodged by Indus Bank and 15 clients.
The bank accused Parthasarathy and eight others, who held top managerial positions, of defaulting on the Rs 137 crore loan. Apart from the bank, 15 clients of KSBL, who parked their money for trading shares, also claimed that they were cheated by the stock broking company. The firm has also been accused of fabricating documents.
‘Apart from 22 cos, 120 other firms recieved diverted funds’
Based on two forensic audit reports of different agencies, CCS officials found that KSBL had primarily 22 subsidiary companies in which Karvy Real Estate Services Ltd (KRESL) was a key firm.
“Apart from these 22 companies, we found 120 other companies also received the diverted funds. This diversion had been taking place since 2013. The origin of the fund flow into these companies during those years was from KSBL,” an investigator said. From KSBL, it was first diverted to KRESL or 21 subsidiary firms. From those firms, it was gain diverted to 120 other linked companies.
While analysing the nature of these subsidiary companies, officials had found that these firms, which were carrying out business operations in solar power projects, insurance broking, data management, consultancy, computer services and other services, became insolvent.
“Stock trading was done extensively through these subsidiary companies, especially nine insurance broking companies. In the last six months before Securities and Exchange Board of India (SEBI) had initiated action against KSBL in 2019, ₹480 crore of trading was done and later they declared a loss of ₹300 crore. Another finding is that money was transferred into personal accounts of Parthasarathy and his associates, who did trading from these accounts,” an official said. Though Parthasarathy could secure bail in a case registered by police, he is still behind bars in Karnataka. Nine cases, including five in Telangana, were registered against KSBL chief and other top management.