A forensic audit of the loan account revealed a conspiracy to circulate loans to various related entities to inflate its books of accounts.
The Enforcement Directorate has arrested the managing director of Prithvi Information Solutions Limited (PISL) for allegedly causing a loss of ₹3,316 crore to a consortium of public sector banks.
Vuppalapati Satish Kumar has been accused of money laundering in connivance with his sister, Hima Bindu B, who is the managing director of VMC Systems Limited (VMCSL).
The ED probe is based on a First Information Report registered by the Central Bureau of Investigation against VMCSL, which had taken loans from the consortium. A forensic audit of the loan account revealed that VMCSL circulated loans to various related entities to inflate its books of accounts.
According to the agency, the company had opened various Letters of Credit worth ₹692 crore in the name of dummy entities, which were subsequently devolved.
Mr. Kumar, through PISL and Ennar Energy Limited, allegedly exaggerated operational revenues by generating fake sales/purchase invoices via companies controlled by his family members. Along with his sister, he allegedly siphoned off a part of the proceeds of crime by remitting it to the overseas entities controlled by the relatives.
“Although V. Satish Kumar claimed that he had no link with the NPA [non-performing assets] of VMCSL, more than 40 hard disks of VMCSL were recovered from his residence during the search carried out by the ED on July 20, 2021,” said the agency.
While examining the digital devices, the ED allegedly found that Mr. Kumar indulged in “benami” transactions and was involved in the efforts to transfer funds to off-shore entities. After his arrest, the agency has obtained his 10-day remand. His sister was earlier arrested in the same case and is also in the ED custody.