HYDERABAD: The Directorate of Enforcement (ED), Hyderabad Zonal Office, conducted searches at seven premises across Hyderabad, Secunderabad and Medchal-Malkajgiri on October 23 in connection with an alleged ₹326.49-crore bank fraud involving Kanakadhara Ventures Pvt. Ltd. (KVPL) and its directors.
The searches were carried out under the Prevention of Money Laundering Act (PMLA), 2002. The premises covered the company’s registered office, the residences of its directors and locations linked to entities and individuals suspected of facilitating the diversion of bank funds.
According to the ED, the searches were part of an ongoing money laundering investigation into the alleged diversion and misuse of credit facilities extended to KVPL by a consortium of banks led by Punjab National Bank (PNB).
CBI case forms basis of ED investigation
The ED investigation stems from an FIR registered by the Central Bureau of Investigation’s Banking, Securities and Fraud Branch (BS&FB), Bengaluru, on December 8, 2022, following a complaint by PNB.
The FIR alleges offences under Sections 120-B, 420, 468 and 471 of the Indian Penal Code, 1860, and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, against KVPL, its directors and others.
The consortium of lending banks comprised PNB, IDBI Bank, Union Bank of India, Andhra Bank (now merged with Union Bank of India) and Bank of Baroda. The alleged fraud is estimated to have caused a loss of ₹326.49 crore to the consortium.
Bank guarantees, letters of credit allegedly misused
The ED investigation has found that bank guarantee and letter of credit facilities sanctioned to KVPL were allegedly misutilised and that funds were diverted through related entities and intermediaries, according to the agency.
Investigators suspect that fabricated steel purchase invoices and transport documents were used in the process. The agency has also found that KVPL operated bank accounts outside the consortium arrangement without the knowledge of the lending banks.
Cash, documents seized
During the search operations, ED officials seized documents, digital devices and other records allegedly connected to the diversion and layering of funds. Unaccounted cash amounting to ₹15 lakh was also seized.
The agency has additionally identified multiple immovable properties and investments as part of its investigation.
Further investigation is under way to trace the movement of funds and establish the extent of the alleged financial irregularities.
