CHENNAI: The black money earned through alleged international drug trafficking was invested by Jaffer Sadiq in 21 different businesses in Tamil Nadu --- including sale of iron and steel scrap, fresh seafood, imported dates and perfume, running indoor sports facilities, restaurants and producing Tamil films — for money laundering, investigation by the Enforcement Directorate shows.
The expelled DMK functionary, who is under investigation for alleged drug operations from 2014-2024, had trafficked controlled substances such as pseudoephedrine and ketamine to Australia, New Zealand, and Malaysia.
The money-laundering operation was carried out through agents who would receive the unaccounted cash generated through the illicit trade and deposit it into the bank accounts of Sadiq, his associates and their firms showing it as unsecured loans. Multiple such transactions, termed as accommodation entries for which agents earned a commission of 1% to 3%, have been documented by the ED in its chargesheet filed before a CBI court in Chennai recently.
The businesses were also used to divert funds to buy at least 14 immovable properties valued at Rs 52.5 crore and nine cars worth Rs 4.38 crore, owned by Sadiq, family members and associates. The purchase of properties also followed a similar modus operandi of infusing cash using accommodation entries, after which payment was made through Demand Drafts (DD).
The construction cost for the properties was paid entirely in cash, ED has found. The bank account of an electronics shop run by Saleem, Sadiq’s brother and co-accused, was used in several transactions, the agency added. Unexplained cash deposits of Rs 33.9 crore were found in accounts of Sadiq, family members, close aides, and entities.
Though most of these businesses were loss-making and did not earn profit, Sadiq and Saleem drew huge salaries. The Income Tax returns (ITRs) of these companies were found to be fudged and riddled with data that did not make sense.
For instance, JSM residency, a two-star hotel constructed by Sadiq from scratch in Purasawalkam in 2015, did not show any expenditure on electricity despite offering air-conditioned rooms. Similarly, a biryani shop opened in 2020 by Saleem showed revenues of Rs 1.5 crore, but could produce only fudged bills showing purchase of chicken and mutton and had no invoices to support purchase of spices or condiments. Companies set up by Sadiq for fish trading showed a profit of 32% despite daily shop registers indicating that it was only around 8%.
Despite operating in different verticals, the bank accounts of these businesses had inexplicable monetary transactions with each other indicating layering and laundering, ED found. For instance, the scrap dealership firm Vistara Iron and Steel, transferred money to a chit fund for an investment on Sadiq’s behalf, but the earnings from the fund were routed to his personal account. Vistara also transferred money to another Sadiq’s firm despite no direct business dealing with that company.
Analysis of ITRs of Sadiq and his family members indicate an abnormal spike from FY13. Sadiq’s capital account showed a jump from Rs 7.15 lakh in FY13 to Rs 2.3 crore in FY14 which progressively increased to Rs 13.86 crore in FY18, the ED found.