New Delhi, Feb 4 (PTI): The Enforcement Directorate (ED) has seized assets worth Rs 1,000 crore following recent raids on the premises of a Chennai-based company, RKM Powergen Private Limited (RKMPPL). The company is accused of fraudulently acquiring coal blocks in Chhattisgarh, according to the ED's statement issued on Tuesday.
The raids were conducted under the Prevention of Money Laundering Act (PMLA), targeting the company and individuals linked to it, including Andal Arumugam and S Arumugam, among others. While the ED did not specify the exact date of the searches, it confirmed the action was part of an ongoing investigation.
The money laundering case originates from a Central Bureau of Investigation (CBI) case, where the accused were charged with the fraudulent acquisition of the Fatehpur East Coal Block in Chhattisgarh. This block was originally allocated by the Ministry of Coal for the power sector.
The ED’s investigation reveals that RKMPPL obtained a loan from the Power Finance Corporation (PFC) based on the coal block allocation. However, a significant portion of the Rs 3,800 crore loan was allegedly diverted to a foreign entity named MIPP, controlled by RKMPPL. The funds were purportedly used to purchase "over-valued" plant and machinery.
Further findings indicate that RKMPPL issued shares to Malaysia-based Mudajaya Corporation Bhd. and Enerk International Holdings Ltd. after receiving the coal block allocation. These shares were sold at a premium of Rs 240 each, while 63.05% of the shares were allotted to RKMPPL at face value. The ED claimed that the valuation lacked transparency, with inconsistent application of fair valuation assessments.
According to the ED, Mudajaya Corporation funded its share premium by rerouting PFC-approved funds intended for equipment procurement to MIPP International, a subsidiary of Mudajaya Corporation. This process allegedly resulted in the "round-tripping" of project funds, with an estimated Rs 1,800 crore being channeled back to RKMPPL through foreign entities under the guise of equity participation.
As part of the ongoing investigation, the ED has frozen Fixed Deposit Receipts (FDRs) and mutual funds worth Rs 912 crore, in addition to seizing key documents related to immovable properties valued at approximately Rs 1,000 crore.
The company and its promoters were not immediately available for comment.
The raids were conducted under the Prevention of Money Laundering Act (PMLA), targeting the company and individuals linked to it, including Andal Arumugam and S Arumugam, among others. While the ED did not specify the exact date of the searches, it confirmed the action was part of an ongoing investigation.
The money laundering case originates from a Central Bureau of Investigation (CBI) case, where the accused were charged with the fraudulent acquisition of the Fatehpur East Coal Block in Chhattisgarh. This block was originally allocated by the Ministry of Coal for the power sector.
The ED’s investigation reveals that RKMPPL obtained a loan from the Power Finance Corporation (PFC) based on the coal block allocation. However, a significant portion of the Rs 3,800 crore loan was allegedly diverted to a foreign entity named MIPP, controlled by RKMPPL. The funds were purportedly used to purchase "over-valued" plant and machinery.
Further findings indicate that RKMPPL issued shares to Malaysia-based Mudajaya Corporation Bhd. and Enerk International Holdings Ltd. after receiving the coal block allocation. These shares were sold at a premium of Rs 240 each, while 63.05% of the shares were allotted to RKMPPL at face value. The ED claimed that the valuation lacked transparency, with inconsistent application of fair valuation assessments.
According to the ED, Mudajaya Corporation funded its share premium by rerouting PFC-approved funds intended for equipment procurement to MIPP International, a subsidiary of Mudajaya Corporation. This process allegedly resulted in the "round-tripping" of project funds, with an estimated Rs 1,800 crore being channeled back to RKMPPL through foreign entities under the guise of equity participation.
As part of the ongoing investigation, the ED has frozen Fixed Deposit Receipts (FDRs) and mutual funds worth Rs 912 crore, in addition to seizing key documents related to immovable properties valued at approximately Rs 1,000 crore.
The company and its promoters were not immediately available for comment.
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