The Enforcement Directorate (ED) has taken significant action under the anti-money laundering law, attaching land assets valued at more than Rs 678 crore belonging to the Avantha Group. This move is part of an ongoing investigation into an alleged bank loan fraud.
Details of the Asset Attachment
The ED issued a provisional order under the Prevention of Money Laundering Act (PMLA) to seize properties located across Haryana, Maharashtra, and Uttarakhand. These assets are associated with various companies under the Avantha Group, which is “owned and controlled” by businessman Gautam Thapar.
Disclosure of Financial Irregularities
On August 19, 2019, CG Power and Industrial Solutions Ltd., a key company in the Avantha Group, disclosed findings to the Bombay Stock Exchange and the National Stock Exchange. This disclosure, made under Regulation 30 of the SEBI (listing obligations and disclosure requirements) Regulations, 2015, indicated substantial understatements in the company’s assets and liabilities.
Misuse of Company Assets
The ED’s statement highlighted several concerning practices within CG Power and Industrial Solutions Ltd. The company understated advances to both related and unrelated parties and provided certain assets as collateral. It was also noted that the company was made a co-borrower or guarantor for loans that were swiftly funneled out without proper authorization.
Involvement of Lender Banks and CBI Investigation
This disclosure caught the attention of the lender banks, leading the State Bank of India (SBI) to file a complaint. Consequently, the Central Bureau of Investigation (CBI) registered a case in June 2021 against CG Power and Industrial Solutions Ltd., Gautam Thapar, K N Neelkanth, Madhav Acharya, B Hariharan, Omkar Goswami, and other unnamed public and private individuals for allegedly orchestrating a “bank fraud” worth Rs 2,435 crore.
ED’s Money Laundering Case and Further Actions
The ED’s money laundering case stems from the CBI’s FIR. Previously, the ED had attached assets worth more than Rs 14 crore and filed a chargesheet under the PMLA. They also arrested Madhav Acharya, identified as a “key managerial personnel” of the company.
Diversion of Funds to Avantha Group Companies
Further investigations by the ED revealed that Rs 1,307.06 crore had been “diverted” to Avantha Group companies through loans. The ED claimed that most of these funds were paid without proper board authorization, and the payments to Avantha Group companies remain outstanding.
