ED raids Brightcom Group: As part of an investigation into alleged foreign exchange violation, the Enforcement Directorate(ED) on Saturday said that it conducted searches and seized cash and gold worth more than Rs 12 crore from the premises of a Hyderabad-based auditor.
The federal probe agency had conducted raids on August 23 under the Foreign Exchange Management Act (FEMA) at the office of Brightcom Group Ltd., residences of its CEO M Suresh Reddy and CFO SLN Raju and the residence and office of its auditor P Murali Mohana Rao.
Various incriminating documents recovered
"During the search, various incriminating documents, digital devices, unaccounted cash of Rs. 3.30 Crore and gold jewellery & bullion worth Rs. 9.30 Crore from the residence of auditor, P. Murali Mohana Rao (M/s P. Murali & Co.) were recovered and seized," ED said on X.
The probe agency said that the residential premises of M Suresh Reddy were sealed.
ED initiated FEMA probe
The ED initiated the FEMA probe based on an investigation being conducted by the Securities and Exchange Board of India (SEBI) regarding impairment of assets worth Rs 868.30 crore by the Brightcom Group through its subsidiaries abroad.
The probe found that Brightcom Group financed preferential issues by "round-tripping" funds through subsidiaries and conduit entities and that it falsely claimed to have received full payment for preferential shares/warrants by providing "forged and fabricated bank statements" to the SEBI.
"It was found that more than Rs 300 crore, advanced as loans to subsidiaries, were partly siphoned off or remained unaccounted," the ED alleged.
The statutory auditors, P Murali & Co. and PCN & Associates (a related entity of P Murali & Co.), apart from failing to report outright fraud, "colluded" with the management/promoters of the company, it said.
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(With PTI inputs)
