The Enforcement Directorate on July 30 said it has attached fresh assets worth over Rs 110 crore in connection with its money laundering probe against Karvy Stock Broking Limited (KSBL), its CMD C Parthasarathy and others.
The money-laundering case was filed based on FIRs by the Hyderabad Police on the complaints of lending banks who alleged the Karvy Group had availed large amounts of loans by illegally pledging their clients’ shares worth about Rs 2,800 crore and the said loans have become non performing asset (NPA) after the release of the client’s securities as per the orders of NSE and SEBI.
"In order to safeguard the proceeds of crime from alienation, the Enforcement Directorate (ED) has identified and attached movable assets totalling Rs 110.70 crore," the probe agency said in a statement. With the latest order, the total attachment of properties by the ED in this case stands at Rs 2,095 crore.
"KSBL was one of the leading stock brokers in the country with millions of clients. The scam came to light after a limited purpose inspection of KSBL conducted by the NSE in 2019 revealed that KSBL had not revealed a DP Account and credited the funds raised by pledging of client securities to 6 of its own bank accounts (Stock Broker-own Account) instead of the stock broker-client account," the ED had said earlier.
It arrested Parathasarathy, group CFO G Krishna Hari in January this year as part of the probe. Both are out on bail now.
A "very complex web" of financial transactions, using several shell entities and non-banking financial companies (NBFCs), have been executed to conceal the source of these funds to project them as untainted funds, the ED had said.
"Parthasarthy had made arrangement through his group companies to pay financial benefits to his sons Rajat Parthasarthy and Adhiraj Parthasarthy in the garb of salary and reimbursement of household expenses and thus the proceeds of crime were projected as untainted money in the hands of the family members," the ED alleged.It claimed the probe found that V Mahesh, MD of KDMSL (a related company) senior official and key management personnel of the Karvy group, is a close associate of Parthasarthy and he "actively assisted and planned the execution of money laundering operations".