Tycoons in Telugu states fear IT-CBI-ED knock

Stunned by I-T raids on Megha, Hyderabad’s top infra firms busy ‘cleaning up’ books.

Hyderabad: Business honchos of the city, in particular those in the big infrastructure domain, have been rendered so stunned by the unexpected search and survey action on Megha Engineering and Infrastructure Limited (MEIL) by the income-tax (I-T) department, that they are all “cleaning-up” their books out of fear.

Big corporations based in Hyderabad, particularly the five big corporates known to be close friends of the ruling dispensation in both Telangana state and Andhra Pradesh, have undertaken serious “mopping up” operations as part of their efforts to ensure there are no paper or digital trails leading officials to possible exposure of murky associations with political parties in case of a raid, which could cause trouble in future.

The new strategy of either the Enforcement Directorate (ED) or the Central Bureau of Investigation (CBI) joining the I-T department at later stages, as was witnessed in quite a few cases of late, is making the biggies of the business community even more jittery.

Informed sources in the I-T department told Deccan Chronicle they picked up inputs from big corporates in the aftermath of an I-T raid on MEIL that top executives of business groups are singularly focussed on “clearing their books” (of accounts), which essentially implies manipulation of accounts, at the earliest.

The five big business houses, into infrastructure, real estate and power among other sectors, and considered close to Chief Ministers of both states do not want to get caught in any political crossfire between the ruling BJP and regional parties.

What has terrified the business groups was that the officials and sleuths of the Hyderabad income-tax region, which comprises Telangana and AP, were deliberately kept out of the planning and information loop in the case of MEIL raids. Not only was the operation totally planned at the I-T headquarters in New Delhi, even IT officials who conducted the searches flew down with their teams, and Central para-military forces, from the national capital instead of relying on Telangana police. This was done because the tax sleuths feared leaks of information to people at Megha Engineering by local taxmen.

Given that there could be raids on any of their offices, these firms got busy in “mopping up” all documents, paper and digital, within 48 hours after the MEIL action on October 10. The whitewashing operations to prepare for any search or audit, or further investigation, is extremely complex and involves huge amounts of time.

What is particularly causing dread amongst these top business groups was that if a heavyweight honcho like MEIL boss P.V. Krishna Reddy can be targeted, despite his political connections across all parties in the country, no one could feel too safe or immune against any action.

“These companies have realised that having good equation with local I-T or ED officials may not be of much use as taxmen from other regions are conducting these operations, without keeping local officials in the loop, like it happened in case of MEIL,” an IT official remarked.

Besides clearing books immediately, the IT department has learnt that one firm was also in the process of upgrading its software completely to “doing away with all old data”.

“These firms have been deeply associated with regional parties and have gone all out to help state leaders, especially during elections. Now, after the MEIL search, they are jittery,” another I-T official said.

He added that no matter how much of cleaning up operations they may conduct, companies are bound to come under the I-T department scanner sooner or later as the murky dealings between companies and political parties is becoming too much to handle and too hard to hide.

The I-T department has covered more than 30 premises of MEIL in Hyderabad, NCR and Mumbai. According to the I-T department, evidence of large-scale bogus expenses, over-invoicing of purchase and sub-contract expenses have been found and seized. The taxmen found and seized evidence of illegal payments through hawala channels running into hundreds of crores and unaccounted assets of Rs 17.4 crore.

“The MEIL search has sent shivers down the spines of other major companies. Not only are they trying to correct their documents and accounts, they are also making efforts to find out whether they were going to be the next target. All top names are in panic mode,” officials added.

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