HYDERABAD: The Enforcement Directorate conducted searches at at the office of M/s Brightcom Group Ltd and residences of company CEO M Suresh Reddy, CFO SLN Raju and auditor P Murali Mohana Rao in Hyderabad on Wednesday.
The agency initiated searches under the provisions of Foreign Exchange Management Act (FEMA), 1999, on the basis of investigation findings carried out by the Securities and Exchange Board of India (SEBI) regarding the impairment of assets worth Rs 868.30 crore by Brightcom Group through its subsidiaries abroad.
The ED enquiry revealed several violations of the provisions of FEMA, 1999 by Brightcom Group Limited. It was revealed that Brightcom itself financed the preferential issues by round-tripping funds through subsidiaries and conduit entities; that it falsely claimed to have received full payment for preferential shares/warrants by providing ‘forged and fabricated bank statements’ to SEBI.
It was further revealed that more than Rs 300 crore advanced as loans to subsidiaries were partly siphoned off or remained unaccounted for. The statutory auditors, M/s P Murali & Co. and M/s PCN & Associates (related entity of P Murali & Co.), apart from failing to report outright fraud, colluded with the management/promoters of the company.
During ED searches, various incriminating documents, digital devices, unaccounted cash of Rs 3.30 crore and gold jewellery & bullion worth Rs 9.30 crore were recovered from the residence of auditor Murali Mohana Rao (M/s P. Murali & Co.). The residential premises of M Suresh Reddy were sealed.