ED registers case against GVK promoters under Prevention of Money Laundering Act

AAI had in 2006 signed an agreement with MIAL for modernisation, operation and maintenance of the Mumbai airport. MIAL was to share 38.7 percent of its revenue with the AAI as an annual fee, the agreement said.

The CBI’s charges against the GVK group can be broadly divided into four categories—siphoning off money through bogus work contracts, diversion of funds to group companies, inflated expenditure and underreporting of airport earnings to meet personal expenses of promoters and their families. The alleged irregularities were spread over a six-year period, from 2012 to 2018

'Bogus' work contract The AAI granted a 200-acre land parcel near the Mumbai airport to MIAL for development and generative revenue, the CBI said. But MIAL in 2017 allegedly entered into a bogus contract with Aishwaryagiri Construction Pvt, Kotia Enterprises, SBK Trade & Infrastructure, Subhash Infra, Aqua Tech Solutions, MV Omni Projects, Richa Industries, Nice Projects and Aditi Infrabuild for real estate development, the agency said.

MIAL transferred around Rs 310 crore to these nine companies but no work was carried out, causing a loss to the Airport Authority of India, it said.

The nine companies also took fake input credit, which resulted in a loss to the exchequer.

Misuse and diversion of funds GVK group allegedly misused Rs 395 crore reserved funds of MIAL to finance its other companies. “As per source information from 2012 onwards, the promoter of GVK used surplus funds of MIAL (to the) tune of Rs 395 crore to finance their own other group companies,” the CBI said in the FIR.

The promoters created forged MIAL board resolutions authorising them to keep the reserve in the form of a fixed deposit with a public sector bank in Hyderabad though MIAL is a Mumbai-based company, the FIR said.

“GVK used overdraft facilities and loans on this FDR. They have given benefits to other companies at the expense of MIAL. Similarly, the company has used surplus funds of MIAL in Hyderabad in other nationalised banks and availed loans and overdraft facility,” it said.

Inflated expenditure The CBI has accused the GVK group of inflating expenditure of MIAL. It said employees of other GVK group companies who had nothing to do with the airport were shown on the payrolls of MIAL, causing a loss to the AAI.

Revenue loss The GVK group connived with the family members and employees to give undue monetary advantage to it and to cause loss to AAI, the CBI said. “As part of the conspiracy, they assigned the premium retail areas of Mumbai airport to their family members at exorbitantly low rates, thereby reducing the revenue of MIAL," the CBI said.

The GVK promoters also used MIAL funds for booking air tickets and hotel stay of family members.

This the second time in as many years that GVK group is facing scrutiny over Mumbai airport. Last year, the Ministry of Corporate Affairs conducted an inspection of the group companies on a whistleblower’s complaint that also included MIAL.

The CBI is likely to share information with income tax authorities as companies used fake input credits, sources said. The agency is expected to call in company officials for questioning during the week.