The Enforcement Directorate has arrested Avasarala Venkateswara Rao, promoter and managing director of Servomax India Private Limited (SIPL) on Monday, for allegedly indulging in money laundering practices.
The investigation by ED was taken up following Central Bureau Investigation’s FIR on February 2, 2018.
According to an ED release on Tuesday, it was found that Mr. Rao indulged in fraudulent transactions and did not repay the loan amounts, leading to the consortium banks suffering a non-performing asset value of ₹ 402 crore.
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“SIPL inflated its books of accounts to qualify for higher loans, issued LCs to related entities without any real purchase of goods, and it was established that Mr. Rao continuously indulged in benami transactions and diverted loan fund for personal benefits,” it said.
It further stated that Mr. Rao used at least 50 entities to route the proceeds of the crime.
“Once the loan account becomes an NPA, he would use his own shell entity (an employee as controlling director) so as to initiate the Corporate Insolvency Resolution Process,” it said, adding his various acts of ‘deliberate violations’.
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Based on evidence gathered so far, the ED said, Mr. Rao was arrested under the provisions of Prevention of Money Laundering Act. On Tuesday, he was produced before the PMLA special court here, and remanded to 14 days of judicial custody.