Madhucon Group under ED's radar for bank fraud

Madhucon Group under ED's radar for bank fraud

NewsTap Bureau

HYDERABAD: The Directorate of Enforcement (ED) has provisionally attached 105 immovable properties and other assets worth Rs 96.21 crore belonging to Madhucon Group of companies, promoted by TRS MP from Khammam Nama Nageswara Rao, and its directors and promoters in a money laundering case against Ranchi Expressway Ltd under the provisions of Prevention of Money Laundering Act, 2002 (PMLA).

The PMLA investigation was initiated in this case after the CBI registered a case against Ranchi Expressways Ltd on March 12, 2019.

National Highways Authority of India (NHAI) had awarded a project of 4-laning of NH-33 on Ranchi-Rargaon-Jamshedpur. A Special Purpose Vehicle (SPV), Ranchi Expressway Limited, was incorporated by Madhucon Group, to execute this project. Kamma Srinivasa Rao, Nama Seethaiah and Nama Prithvi Teja were the founder directors of the said company and Madhucon Projects Limited was the Engineering Procurement Construction (EPC) contractor of the project. Madhucon Group couldn't complete the project despite availing the full loan amount, and subsequently, their contract was terminated and an FIR was booked based on the directions of the High Court which were, in turn, based on the reports of Serious Fraud Investigation Office (SFIO) and NHAI.

Madhucon Group had not utilized the entire loan amount for its stated purposes and allegedly diverted it to its associated entities. They also fabricated false maintenance reports and work progress to claim higher expenses.

It had been identified that the Madhucon Group was involved in creating drawings of the accounts to cheat the banks and NHAI. It was said that Madhucon Group could not repay the loans and the account turned into a Non-Performing Asset (NPA).

ED investigation has revealed that the Madhucon Group promoters siphoned off the loan funds of this project by taking the entire EPC Contract from its SPV and then taking huge mobilisation and material advances, but instead of using those advances for the work, they used it in their other projects.

They identified a direct diversion of Rs 361.29 Crore from the loan funds. The ED identified landed assets of Rs. 88.85 Crores at Hyderabad, West Bengal, Visakhapatnam, Prakasham, Krishna District and movable assets of Rs 7.36 Crore including shareholding of the promoters in Madhucon Projects Ltd, totalling to Rs 96.21 Crore and has issued the Provisional attachment order on July 1 to preserve the proceeds of crime. Further investigation is going on and more details are awaited.