The Enforcement Directorate (ED), Chennai, has frozen properties worth ₹48 crore belonging to Kanishk Gold Private Ltd (KPGL), Chennai, under the Prevention of Money Laundering Act (PMLA).
The firm was engaged in the business of manufacturing gold jewellery which was marketed under the brand name ‘KRIZZ’. The jewellery was manufactured at a unit at Natarajapuram, Pukkathurai Village, Maduranthagam taluk, Kancheepuram.
The ED had initiated investigations under the PMLA based on an FIR dated March 21, 2018, registered by the Central Bureau of Investigation-Bank Fraud and Securities Cell (BF&SC), Bengaluru. The FIR was registered based on a complaint given by the General Manager of State Bank of India (SBI), Chennai, alleging offences of forgery, cheating and criminal conspiracy.
It was alleged that the promoters of Kanishk had availed of huge bank loans from a consortium of 14 banks with SBI as the lead bank.
Credit facilities were secured through raw materials, semi-finished goods, finished goods, stores and spares, among others. However, it later came to light that the stock statements were fudged with the help of chartered accountants, and on inspection by the banks in May 2017, it was found that no stocks were there; with this, all the operations of the company came to a standstill.
Later, a forensic audit was conducted to identify fraudulent financial statements, diversion and siphoning of bank funds and asset- stripping between 2009 and 2017. The audit revealed misrepresentation/falsification of records, diversion of funds and disposal of stocks by the company.
The total loss caused to the banks due to falsification/misrepresentaion amounted to ₹824 crore as on December 31, 2017.
K.S.V.V. Prasad, Joint Director, ED, Chennai, said: “During investigations, falsification of records was admitted and the gap between actual stock and reported stock [to banks] was put at 3,000 kg of gold.”
Following the investigation, simultaneous searches were conducted at the factory and residential premises of directors and chartered accountants and certain incriminating documents were recovered. After the search, on the reasonable belief that land, buildings, plant and machinery available at the factory in Pukkathurai village were related to the crime, they were frozen. ED officials said that further investigation was in progress.
