The Enforcement Directorate (ED) has taken significant action under the Prevention of Money Laundering Act (PMLA), attaching properties valued at over Rs 678 crore belonging to the Avantha Group. This move is part of an ongoing investigation into an alleged bank loan fraud involving the group.
Properties Attached Across Three States
The provisional order issued by the ED has led to the attachment of properties situated in Haryana, Maharashtra, and Uttarakhand. These assets are owned by various companies within the Avantha Group, which is “owned and managed” by prominent businessman Gautam Thapar.
The Roots of the Investigation
The investigation traces back to a disclosure made by CG Power and Industrial Solutions Ltd. on August 19, 2019. The company, under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, reported to the Bombay Stock Exchange and National Stock Exchange about findings that had potential implications on its financial position.
The disclosure revealed significant understatements of the company’s assets and liabilities. It was discovered that advances to related and unrelated parties were understated, certain assets were provided as collateral without proper authorization, and the company was made a co-borrower or guarantor to facilitate loans that were then diverted out of the company.
Bank Fraud Allegations and Subsequent Action
The disclosure caught the attention of lender banks, leading to a complaint by the State Bank of India (SBI). This prompted the Central Bureau of Investigation (CBI) to register a case in June 2021 against CG Power and Industrial Solutions Ltd., Gautam Thapar, and several other individuals, accusing them of perpetuating a “bank fraud” on a consortium of banks to the tune of Rs 2,435 crore.
The ED’s money laundering case stems from this CBI FIR. Prior to this, the ED had attached assets worth over Rs 14 crore and filed a chargesheet under the PMLA. A key managerial personnel of the company, Madhav Acharya, was also arrested during the investigation.
Massive Fund Diversion Uncovered
Further investigations revealed that a staggering Rs 1,307.06 crore was diverted to Avantha Group companies through loans that were disbursed without the proper authorization of the company’s board. The ED claims that the funds paid to Avantha Group companies remain outstanding, adding to the gravity of the situation.
Conclusion
The ongoing investigation by the Enforcement Directorate into the Avantha Group and its associated companies underscores the seriousness of financial misconduct within corporate entities. The attachment of properties worth over Rs 678 crore is a significant development in the case, as authorities continue to unravel the complexities of this alleged financial fraud.
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