ED Raids SEW Infra, Seizes Rs.120 Crore in Bank Fraud Case
SEW LSY Highways Limited is a special purpose vehicle for the execution of a contract awarded by Uttar Pradesh State Highway Authority.
Hyderabad: The Enforcement Directorate (ED) officials have conducted raids on the premises of SEW Infrastructure Limited (SIL) and Prasad and Company (Project Works) Private Limited and their promoters in connection with a case relating to the bank fraud and seized Rs.120 crore and frozen 33 bank accounts related to the accused companies.
The ED officials registered cases under the Prevention of Money Laundering Act (PMLA), 2002, in connection with a bank fraud case against SEW Infrastructure Ltd. (SIL), Prasad and Company (Project Works) Pvt. Ltd. (PSPWPL), group companies and their promoters or directors.
The ED had initiated investigation based on an FIR registered by the CBI, ACB, Hyderabad against SEW LSY Highways Limited and others for siphoning and diversion of loan funds, cheating and criminal misconduct resulting in loss of public money.
SEW LSY Highways Limited is a special purpose vehicle for the execution of a contract awarded by Uttar Pradesh State Highway Authority. It raised a term loan of Rs.1,700 crores from a consortium of 14 banks led by Punjab National Bank.
SEW LSY Highways awarded the engineering, procurement and construction (EPC) contracts to SIL and its group entities which further sub-contracted the work to other entities.
During the ED's probe, it was revealsed that a part of the project was sub-contracted to group entities such as SEW Transport Networks Ltd. (STNL), which in turn further sub-contracted the same at lesser values to other parties including PSPWPL which in turn further sub-contracted the same at lesser rates.
"As a result of this sub-contracting activity to group entities at lesser rates, SIL and its group entities diverted and siphoned off the loan funds. Further, as per the terms of loan, the promoters were required to bring in their own contribution. However, investigation revealed that a part of the loan funds was diverted to PSPWPL (30 per cent stake holder in SEW LSY Highways Ltd.), which in turn infused the loan funds as promoter’s contribution. A total of Rs.603.68 crore was disbursed to SEW LSY Highways by the banks for the project. However, the project was not completed, and the term loan became NPA resulting in an outstanding amount of Rs.621.78 crore to the banks," the ED officials said.
Search operations resulted in the seizure of financial documents evidencing suspected diversion of funds as well as property documents, having current market value of around Rs.120 crore, in the names of the promoters and their family members. 33 bank accounts belonging to SEW Infrastructure, STNL as well as their directors and family members were frozen during the search operations.
