The Enforcement Directorate on Tuesday filed a money laundering case against GVK Group that runs the Mumbai airport, its chairman Dr G V K Reddy, his son G V Sanjay Reddy and several others for alleged irregularities worth over Rs 800 crore in the development of Mumbai airport, officials familiar with the developments said.
ED’s probe under PMLA (Prevention of Money Laundering Act) is based on a CBI FIR registered on June 27 in which 13 people were named including Reddy and his Sanjay Reddy, MIAL (Mumbai International Airport Limited) and several companies which were given contracts at the airport. CBI had even searched the premises of GVK in Mumbai and Hyderabad last week.
The anti money laundering probe agency will soon start examining the accounts of companies and transfer of funds to ascertain the money laundering. It has powers to attach properties during investigation.
In a statement issued last week, a MIAL spokesperson said, “MIAL is surprised to note the registration of case by CBI against MIAL and others. MIAL would have provided every assistance had the agency sought explanation or any document even if a preliminary enquiry had been initiated. MIAL is a transparent and responsible corporate entity which is committed to co-operate with the agency in its investigation to arrive at the truth”.
On Tuesday, a GVK spokesperson said, “We have not received any notice from the Enforcement Directorate”.
MIAL is a PPP (public private partnership) between AAI (Airports Authority of India), GVK and foreign entities in the name of MIAL under which GVK has a shareholding of 50.5%, AAI with 26% and remaining with shareholding is with foreign companies.
The AAI entered an OMDA (operation, management and development agreement) in April, 2006 for modernization and up gradation, operation and maintenance of Mumbai airport as part of joint venture called –MIAL. As per the agreement, it was decided that MIAL will share 38.7% of their revenue as annual fee with AAI and that the government authority will have the first right on the revenue. “The essence of agreement was to create a world class facility and at the same time protecting the interests of government of India, promoters and passengers,” CBI FIR filed on June 27 states.
“Despite there being a clear cut understanding in the OMDA, the promoters of GVK group in MIAL, in connivance with their executives and the unknown officials of AAI resorted to siphoning of funds fraudulently adopting various modus operandi,” CBI says.
It has been alleged that MIAL entered into fake work contracts during 2017-18 with at least nine companies on the pretext of real estate development. MIAL transferred the funds to them but these projects have never been executed on the ground, and the transactions were only on papers. Using this modus operandi, Rs 310 crore have been fraudulently siphoned off which resulted in wrongful loss to AAI and corresponding gain to themselves.
Similarly, from 2012 onwards, GVK used the surplus of MIAL to the tune of Rs 395 crore to finance their other group companies.
The promoters of GVK, CBI has alleged, also embezzled funds by resorting to inflating the expenditure of MIAL.
Subsequently, CBI FIR alleges that the GVK group connived with their family members, relatives and employees they assigned the premium retail areas of Mumbai airport to their family members at extremely low rates thereby reducing the revenue of MIAL on account of rentals and sales.
