CHENNAI: The Enforcement Directorate on Tuesday said they have seized documents related to immovable properties worth Rs 1,000 crore and issued freezing orders for fixed deposit receipts (FDRs) and mutual funds amounting to Rs 912 crore as part of an ongoing PMLA investigation into RKM Powergen Private Ltd.
ED said that they had conducted search operations at three locations in Chennai, targeting premises linked to Andal Arumugam, S Arumugam and others as part of the investigation into RKM Powergen Private Limited (RKMPPL).
ED had initiated investigation based on an FIR registered by the CBI Economic Offences Wing.
The case pertains to an alleged fraud in the acquisition of the Fatehpur East Coal Block in Chhattisgarh, allocated by the Ministry of Coal.
ED’s investigations reveal that RKMPPL secured a loan from the Power Finance Corporation (PFC) based on the coal block allocation. A significant portion of these funds of Rs 3,800 crore was transferred to a foreign entity, MIPP, controlled by RKMPPL, for the purchase of overvalued plant and machinery.
Further investigation revealed that following the coal block allocation, RKMPPL issued 26% of its shares to Malaysia-based Mudajaya Corporation Bhd. and 10.95% to Enerk International Holdings Ltd., both at a premium of Rs 240 per share. In contrast, 63.05% of shares were allotted to RKMPPL at face value.
The valuation methodology lacked transparency, and the Chartered Accountants’ fair valuation assessment was not applied consistently, ED said. Subsequent investigation found that Mudajaya Corporation funded its Rs 240 per share premium by rerouting PFC-sanctioned funds intended for equipment procurement from MIIP International, a subsidiary of Mudajaya Corporation.
This effectively resulted in the round-tripping of project funds, ED alleged. An estimated Rs 1,800 crore was systematically routed back to RKMPPL through foreign entities under the guise of equity participation, the agency said.
During the search operations, multiple mobile phones and electronic devices containing incriminating evidence were also seized, ED said.