HYDERABAD: The Enforcement Directorate has provisionally attached 105 immovable properties and other assets worth `96.21 crore of the Madhucon Group of Companies, its directors and promoters, including TRS MP Nama Nageswar Rao, in a money laundering case against M/s Ranchi Expressway Ltd.
The attached assets include lands worth `88.85 crore located in Hyderabad and West Bengal, and in Visakhapatnam, Prakasam and Krishna districts in Andhra Pradesh, and movable assets worth `7.36 crore including shareholding of the promoters in M/s Madhucon Projects.
NHAI had awarded a project of four-laning of 163.5 km of the NH-33 between Ranchi, Rargaon, Jamshedpur on design, build, finance, operate and transfer (DBFOT) pattern to Madhucon Project Limited in March 2011. Following this, the Madhucon Group floated a Special Purpose Vehicle (SPV) called M/s Ranchi Expressway Limited (REL), to execute the project.
Madhucon Group couldn’t complete the project despite availing the full loan amount, and subsequently, the contract was terminated by the NHAI and a FIR was booked based on the directions of the High Court which was based on the reports of SFIO and NHAI.
ED started investigation based on a case registered by the CBI at Ranchi, Jharkhand in March 2019. Investigation revealed that the promoters of the Madhucon Group syphoned off the loan amount by taking the entire EPC contract from its SPV, and then taking huge mobilisation and material advances. These advances were used in other projects. Also, `75.50 crore cash was generated by paying money and then receiving back the amount through six shell entities, which were fully under the control of the group chairman Nama Nageshwara Rao and his son Nama Seethaiah.
While these sub-contractors based in Telangana and AP did no work and lacked sufficient expertise, they took large advances from the loan funds and paid back huge amounts to Madhucon Group on the pretext of using the company’s equipment and labour. ED has identified direct diversion of `361.29 crore from the loan funds.
ED conducted searches, recorded the statements of multiple bankers, forensic auditors, engineers, sub-contractors and promoters of Madhucon Group and followed the money trail. During the search operations in June 2021, ED seized incriminating evidence and unaccounted cash of `34 lakh from the residential premises of Nama Nageshwar Rao.
Investigation also revealed that REL obtained loans of `1,030 crore from the consortium of banks led by Canara Bank. However, the entire loan amount was not utilised. Another key finding of ED probe is that the LIE (Lenders Independent Engineer) chosen for this project was a related party of Madhucon. It consistently issued wrong reports favourable to the Group.