CHENNAI: A year after the Enforcement Directorate (ED) launched its probe into the gutkha scam, under the Prevention of Money Laundering Act (PMLA), it has attached 174 immovable properties situated in Tamil Nadu, Puduchery and Andhra Pradesh with market value of Rs 243.80 crore and moveable properties in the form of shares and vehicles worth Rs 2.29 crore.
An investigation conducted under the PMLA revealed that accused AV Madhava Rao, PV Srinivasa Rao and Tallam Uma Shankar Gupta, promoters and directors of Jayem Group, which manufactured MDM brand of gutkha, and others, who were involved in illegal manufacture, sale and distribution of gutkha products in Tamil Nadu, had a turnover of Rs 639.40 crores from June 2013 to June 2016. The money derived out of the criminal activities was invested in moveable and immoveable properties in Andhra Pradesh, Puduchery and Tamil Nadu, according to the ED.
The ED had initiated investigations under the provisions of the PMLA into the gutkha scam against unknown officials of the State and Central governments, public servants and others, based on an FIR filed by the CBI.
The CBI had registered the FIR, on the directions of the Madras High Court, to conduct investigations into all aspects of the illegal manufacture, import, supply, distribution and sale of gutkha and other chewable tobacco products, which were banned in Tamil Nadu and Puduchery from May 2013.
The ED investigation revealed that money from illegal sale of gutkha was channelised into real estate in the Guntur district of Andhra Pradesh, apart being invested in Salem, Puducherry and Chennai. These assets consisting of 174 immoveable properties and moveable properties totalling Rs 246 crore have been provisionally attached.
The investigation further revealed that investments made by the accused were in land - purchased in the name of Gayathri Realtors, Medha Diary Private Limited, Vaijayanthi Spinners, sourced through cash generated out of the sale proceeds of the illegal gutkha business. Three factory premises were also acquired by the accused in the names of relatives or employees during the period to facilitate smooth running of their illegal gutkha business, said Zone -II ED Joint Director P Mannikavel.
Further, out of the profits of gutkha business, the ED said personal investments were made by the accused by purchasing land in their names and in the names of family members or relatives. Besides, shares were purchased in Goutham Buddha Textile Park, Guntur and vehicles were purchased for the sale and distribution of gutkha products.
The criminal activity is related to payment of bribes to the Central and State government officials as quid pro quo for allowing the illegal business of gutkha and other tobacco products, which are banned in Tamil Nadu, and is related to the scheduled offence under the PMLA. Therefore, the properties acquired by means of illegal manufacture and sale of gutkha resulting from such criminal activity were consequently liable to attachment, ED officials said.
The CBI had conducted raids at 35 locations across Chennai, Tiruvallur, Thoothukudi, Guntur (Andhra Pradesh), Mumbai and Bengaluru, including at the premises of TN minister Vijaya Bhaskar, former TN DGP TK Rajendran, former Chennai Police Commissioner S George and several other top officials of the Central Excise department, Food Safety department and Health department.
The gutkha scam came to light on July 8, 2017, when Income Tax sleuths raided offices and residences of Jayem Industries (now known as Annamalai Industries) which had been facing charges of tax evasion worth Rs 250 crore and seized diaries containing incriminating evidences linking top officials of the State.
The case further gained prominence after the Income Tax sleuths, while inspecting the Poes Garden residence of former CM J Jayalalithaa, stumbled upon letters exchanged between the Income Tax department and top bureaucrats of the State over the case in November 2017.
Interestingly, George, the then Chennai Police Commissioner, indirectly acknowledged gutka scam but rejected allegations of receiving kickbacks from gutkha manufacturers. "There was a gutkha scam. There was some illegal activity going on and how do you expect the Commissioner to know what happens in all 300 police stations?", said George while blaming the then Deputy Commissioner Jayakumar with the Chennai Police Crime Branch for failing to bring the issue to his notice.