ED books money laundering case against GVK Group promoter, others

Case pertains to alleged loss of about ₹705 crore to the exchequer

July 07, 2020 03:49 pm | Updated 10:11 pm IST - New Delhi

The Enforcement Directorate has registered a money laundering case against G.V.K. Reddy, promoter of GVK Group and whole-time director of Mumbai International Airport Limited (MIAL), and others in connection with alleged loss of about ₹705 crore to the exchequer.

The money laundering probe is based on the corruption case lodged by the Central Bureau of Investigation last month. Among the accused are MIAL, its managing director and Mr. Reddy’s son, Venkata Sanjay Reddy, GVK Airport Holdings Limited and several other private companies.

Unknown officials of the Airports Authority of India (AAI) have also been accused of deliberately ignoring the alleged financial irregularities committed from 2012 to 2018.

Joint venture

According to the CBI case, the AAI had floated a joint venture by the name of MIAL for the modernisation, upgrade and maintenance of the Mumbai airport. The GVK Airport Holdings Limited held 50.50% of its shares, 26% was with the AAI and the rest was with foreign entities.

On April 4, 2006, the AAI had entered into an agreement with MIAL for development works at the airport.

As alleged, the MIAL funds were siphoned off through various ways. The accused persons showed execution of bogus work contracts with respect to the development of about 200 acres of land parcel around the airport. The work contracts shown to have been awarded to several private firms were never executed.

‘Funds diverted’

The CBI case also alleges that the reserve or surplus funds of MIAL, to the tune of ₹395 crore, were diverted for the financing of group companies.

The accused persons forged board meeting resolutions of MIAL to allow for the reserve/surplus funds to be kept in fixed deposits with public sector banks in Hyderabad, even when MIAL was based in Mumbai. Loans or over draft facilities were taken against those fixed deposits and the funds were used for the benefit of their Hyderabad-based companies, as alleged.

The accused shifted employees of the GVK Group head office in Hyderabad and the group companies on to the pay rolls of MIAL. The employees were not involved in MIAL operations, but were being paid for all these years causing revenue loss to the AAI, the CBI alleged.

The premium retail area of Mumbai airport were given to the companies owned by the relatives and employees of accused persons at significantly low rates, which reduced the revenue of MIAL, alleged the agency, listing other financial irregularities.

In a statement, the MIAL had earlier expressed surprise over the registration of case by the CBI, stating that it would have provided every assistance had the agency sought explanation or any document even if a preliminary enquiry had been initiated in the matter.

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