NEW DELHI: The Enforcement Directorate (ED), which has initiated an investigation into the Amrapali case, is likely to question all the lenders of the fraud-hit realty firm, including JP Morgan. The quizzing will be on the basis of the forensic audit report, which has alleged that the bank helped Amrapali Group in siphoning off homebuyers’ funds.
On July 23, the Supreme Court ordered a probe into the serious financial fraud by the Amrapali Group, which reportedly diverted money of 42,000 homebuyers for its own profit. The violations range from disregarding of foreign investment norms, paying dividend without generating profits, setting up fake companies and overvaluing shares.
“The agency has already looked into all the money trails of the company and is now looking into the forensic report. There are serious discrepancies in the way lenders conducted themselves. They will be questioned soon,” a senior official from the Enforcement Directorate told TMS.The Supreme Court had earlier ordered a forensic audit of the Amrapali Group, sensing financial fraud by the group’s promoters. The forensic auditors, in their report submitted to the court, also pointed out that there were discrepancies in the investments made by JP Morgan Real Estate Fund in the Amrapali Zodiac project.
The 2,000-page report submitted by court-appointed auditors Ravi Bhatia and Pawan Aggarwal alleged that JP Morgan Chase & Co unit violated India’s foreign investment rules and helped property developer Amrapali Group divert funds from realty projects.
JP Morgan invested around `85 crore ($12.3 million) in an Amrapali Group company’s shares and later sold them to two little known companies, namely Neelkant and Rudraksh, for `140 crore. The bench noted that Neelkant and Rudraksh were owned by Chandan Kumar, who was a peon in the office of Amrapali’s statutory auditor. The auditors flagged the issue, questioning how a company (JP Morgan) could do such a huge transaction without any verification.
“The shares were overvalued for making payments to JP Morgan… It was adopted as a device for siphoning off the money of homebuyers to foreign countries,” the two-judge Supreme Court bench headed by Justice Arun Mishra said in its ruling.