ED attaches assets worth Rs 134 cr in Karvy Group money laundering case

New Delhi, Oct 27 (IANS) The Enforcement Directorate (ED) has said that it has attached properties worth Rs 134.02 crore in the form of 1000 non-convertible redeemable preference shares of face value Rs 200 each of KFin Technologies Ltd (KFintech) held in the name of son of C. Parthasarathy, the CMD of Karvy Stock Broking Ltd, in a money laundering case.  

The ED said on Thursday in a statement that the properties worth Rs 134.02 under the Prevention of Money Laundering Act (PMLA), 2002, on October 23. 

The financial probe agency had registered a case on the basis of FIRs registered by the CCS Hyderabad Police, alleging that KSBL availed loans by illegally pledging its clients' shares worth about Rs 2,800 crore and did not repay the said loans which were subsequently declared as NPA and fraud accounts.

It said that the loans funds were diverted to related companies like -- Karvy Data Management Services Ltd., Karvy Realty India Ltd., etc. which was otherwise than for stated purpose and the diverted loan funds were routed via multiple defunct NBFCs to Karvy Financial Services Limited (an NBFC of the Karvy Group) to wash its bad debt accounts or NPAs. 

 "ED probe found that Parthasarathy had special privileges rights to subscribe to additional equity shares of KFin Technologies Ltd. (Kfintech) at a pre-determined price as per the Shareholders Agreement dated Augist 3, 2017. In consideration for termination of Shareholders Agreement and extinguishment of all such rights, KFintech allotted 1000 non-convertible redeemable preference shares in name of Adhiraj Parthasarathy, son of C. Parthasarathy, at par on October 25, 2021," the agency said.

It added that the actual redemption premium or termination fee agreed upon was Rs 164 crore. 

"However, the amount was decreased by Rs 30 crore as Kfintech discovered certain unauthorised transfers of shares of Petronet LNG Limited to the demat accounts of KSBL and Karvy Consultants Limited (KCL) and thus triggering the indemnity payout clause of the said mutual agreement. Hence, these shares were redeemable after a period of two years at a net redemption premium of Rs 134.02 crore," the ED said. 

The ED probe also found that the said issuance of Redeemable Preference Shares is in lieu of the rights and privileges enjoyed by Parthasarthy in Kfintech and thus he has the primary right or ownership of the said consideration received. 

"Parthasarathy and his concerns had made an arrangement that the said consideration from KFintech are taken in the name of Adhiraj Parthasarathy as he is not an accused in the FIRs. Further, the said property in the form of Redeemable Preference Shares were concealed by Adhiraj Parthasarathy and were not deliberately disclosed in his submissions made before the ED during the course of investigation," the agency said.

The ED has so far attached assets worth Rs. 2,229.56 crore. 

--IANS

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