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Case against GVK Group promoter: CBI conducts searches in Mumbai, Hyderabad

G.V.K. Reddy, promoter of GVK Group and full-time director of Mumbai International Airport Limited (MIAL)

G.V.K. Reddy, promoter of GVK Group and full-time director of Mumbai International Airport Limited (MIAL)   | Photo Credit: Mohammed Yousuf

The accused caused a loss of about ₹705 crore to the exchequer, according to FIR

The CBI has conducted searches in Mumbai and Hyderabad in connection with an alleged corruption case against G.V.K. Reddy, promoter of the GVK Group and whole-time director of the Mumbai International Airport Limited (MIAL), and others.

“The searches were carried out in the office premises. No one has been questioned so far,” said a CBI official.

According to the FIR, the accused persons caused a loss of about ₹705 crore to the exchequer. Unknown officials of the Airport Authority of India (AAI) are also under the scanner for ignoring the alleged financial irregularities committed from 2012 to 2018.

The MIAL, its MD and Mr. Reddy’s son Venkata Sanjay Reddy, the GVK Airport Holdings Limited and some other private companies have been named in the FIR.

The AAI had, as part of the public private partnership, set up a joint venture by the name of MIAL for the modernisation, upgradation and maintenance of the airport. While 50.50% of the shareholding was with the GVK Airport Holdings Limited, 26% was with the AAI and the rest was with foreign entities.

The AAI entered into an agreement with the MIAL on April 4, 2006, for the development work at the airport.

Funds siphoned off through bogus work

The FIR alleges that funds were siphoned off by showing the execution of bogus work contracts related to the development of about 200 acres around the airport, which was meant to ensure revenue generation. The work contracts shown to have been given to several private firms were never executed, as alleged.

The reserve or surplus funds to the tune of ₹395 crore were also allegedly diverted for financing group companies. The accused forged board meeting resolutions of the MIAL, allowing to keep the reserve/surplus funds as fixed deposit with public sector banks in Hyderabad, even when it is a Mumbai-based company.

It is alleged that loans/overdraft facilities were taken against the fixed deposits and the funds used for the benefit of their Hyderabad-based companies.

The expenditure of the MIAL was also inflated. They allegedly shifted the staff of the GVK Group head office in Hyderabad and the employees of the group companies on to the pay rolls of the MIAL. They were not at all connected to the MIAL operations but were being paid for all these years causing revenue loss to the AAI, it is alleged.

Revenue earnings under-reported

The accused also under-reported the MIAL’s revenue earnings. The FIR alleges that the promoters connived with their family members, relatives and employees to give undue monetary advantage to them. The premium retail area of the Mumbai airport was assigned to the companies owned by them at exorbitantly low rates, thereby reducing the revenue of the MIAL on account of rent sales earnings.

The promoters of the GVK Group also misused the funds of the MIAL by entering into agreements with a company owned by family members/employees to book train/air travel tickets and hotels for those who were not connected with the affairs of the MIAL.

Surprised over registration of the FIR: MIAL

The MIAL has expressed surprise on the registration of the FIR by the CBI on alleged embezzlement of funds of the airport company.

The company said it will cooperate with CBI.

“The MIAL is surprised to note the registration of case by CBI against MIAL and others. MIAL would have provided every assistance had the agency sought explanation or any document even if a preliminary enquiry had been initiated. MIAL is a transparent and responsible corporate entity which is committed to co-operate with the agency in its investigation to arrive at the truth,” a spokesperson for MIAL said in a statement.

(With inputs from our Mumbai Special Correspondent)

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Printable version | Aug 4, 2020 9:06:20 AM | https://www.thehindu.com/news/national/case-against-gvk-group-promoter-cbi-conducts-searches-in-mumbai-hyderabad/article31972254.ece

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