Hyderabad: ED freezes shares of Karvy accused worth Rs 700 crore

HYDERABAD: Enforcement Directorate has issued a Freezing Order of shares of the accused in the Karvy scam on September 24 under the Prevention of Money Laundering Act, and the estimated value of the share has arrived at Rs 700 Crore as per the valuation report.
Total loans taken by Karvy are estimated to be around Rs 3,000 crore. Prima facie, probe revealed the net amount of Rs 1,096 crore was transferred by KSBL to its group company Karvy Realty (India) Ltd from April 2016 to October-2019.
ED probe also found that deletion of files and emails from the computer servers by using anti-forensic tools had been done, under the instructions of C. Parthasarathy
ED has conducted searches at six Karvy Stock Broking Limited locations and frozen shares of Karvy Group held directly and indirectly by the Chairman and Managing Director C Parthasarathy, his sons, RajatParthasarathy and Adhiraj Parthasarathy, and their entities in order to safeguard the proceeds of crime.
ED issues ECIR under PMLA based on FIRs by Hyderabad CCS police on the complaint of HDFC Bank alleging that KSBL had illegally pledged the securities of its clients and taken a loan of Rs 329 Crore and diverted the same.
In a second case, Hyderabad police Karvy directors were booked for defrauding IndusInd Bank to the tune of Rs 137 Crore and Cyberabad Police have registered one more FIR for defrauding ICICI Bank to the tune of Rs 562 Crore.
ED alleged" Karvy under the leadership of C Parthasarathy had committed gross irregularities and all the illegally taken loans have become NPA. . The total loan proceeds taken from multiple Banks using the same modus operandi is around Rs 2873 Crore. NSE and SEBI are also investigating the affairs of KSBL. ED is conducting investigation under PMLA against Karvy Group of Companies for their involvement in the offence of money laundering to the tune of Rs 2873 Crore,"
The investigation revealed that KSBL did not report one of the Depository Participatory accounts in the filings made from January 2019 to August 2019. KSBL fraudulently transferred shares belonging to its clients to its own Demat account (which is not disclosed to the exchanges) and pledged the shares held in these accounts with the lenders/banks (HDFC Bank, ICICI Bank, IndusInd Bank, Axis Bank, etc.).
"The securities lying in the aforesaid DP account of KSBL actually belonged to the clients who are the legitimate owners of the pledged securities. KSBL did not have any legal right to create a pledge on these securities and generate funds. The quantum of such loans taken by KSBL from the illegal pledge of shares is to the tune of Rs 2873 crore.KSBL credited the funds raised by pledging of client securities to 6 of its own bank accounts (“Stock Broker-own Account”) instead of the “Stock Broker-Client Account” and further has not reported these 6 own bank accounts (“Stock Broker-own Account”) held with various private banks, to SEBI,"
ED further alleged" KSBL did large scale trading activities in the names of 9 companies that included Karvy Consultants Limited (KCL), which is a group company of Karvy, and 8 other shell companies, in the guise of doing insurance business. During the investigation conducted under PMLA, it also came to light that several Crore of Rupees were diverted for acquiring immovable properties through the group company, KRIL, and other group companies,"
. The bank statement analysis of these companies revealed that there is a large value rotation of funds between the Karvy Group Companies and the shell companies’ bank accounts. Earlier, ED has recorded the statement of C. Parthasarathy in Chanchalguda Jail.