The Enforcement Directorate (ED) officials on Saturday conducted searches at the residence and offices of former union minister and Telugu Desam Party (TDP) MP YS Chowdary in Hyderabad for alleged financial irregularities. The agency also issued a summons asking him to appear before it on November 27.
Chowdary, a member of the Rajya Sabha, is a close aide of TDP President and Andhra Pradesh Chief Minister N Chandrababu Naidu. He was earlier the Minister of Science and Technology in the Narendra Modi Cabinet till March this year, before the TDP pulled out of the BJP-led NDA government at the Centre.
Here are five things to know about the latest raid.
1. A Rs 5,700 crore fraud?
The ED said that searches conducted at seven locations in Hyderabad and one in Delhi revealed that several banks have been defrauded by companies owned by Chowdary to the tune of over Rs 5,700 crore.
2. Why were the raids conducted?
The raids were conducted in connection with three FIRs registered by the Central Bureau of Investigation (CBI) on complaints from three banks stating that the consortium of banks was cheated to the tune of Rs 364 crore by Best & Crompton Engineering Projects Ltd, Chennai (BCEPL), an entity linked to the Sujana Group of companies, which had obtained loans by falsification of accounts and submission of false statements.
In 2015 as well, as he was inducted into the cabinet, it was reported that Chowdary ran a company, Sujana Towers, that was a loan defaulter and had not paid interest to Central Bank of India for a loan of Rs 316 crore.
At around the same time, the Mauritius Commercial Bank Ltd had approached the Hyderabad High Court against Sujana Universal, another company promoted by the minister, on grounds that the company had defaulted on a Rs 92 crore loan it had availed through its subsidiary.
3. Six luxury cars seized
In the latest raid, the ED seized six luxury cars, including a Ferrari, Range Rover and Benz, from Chowdary’s residence. These vehicles, registered in the name of dummy companies, have been seized under the provisions of the Prevention of Money Laundering Act (PMLA), the ED claimed.
However, in his response, Chowdary was quoted as saying: “Of the six cars seized by ED, three are registered in individual names and three are in the names of companies. The three companies which own the cars are not dummy companies as alleged. I have only a symbolic stake of 1% in these companies.”
4. Shell companies
In a statement, the ED said that documents recovered revealed that various cases were already pending under the Foreign Exchange Management Act (FEMA) being investigated by the Directorate of Revenue Intelligence (DRI) and CBI. Similarly documents related to forex transactions were also seized, the ED claimed.
“Documents recovered indicate that they are controlling over 120 companies and most of them are non-operating or companies on paper only without any genuine business activities,” it said.
Preliminary investigations indicate that certain loans to group companies were sanctioned against the personal guarantee of Chowdary.
5. Sujana group denies allegations
Meanwhile, Sujana Group said in a statement that the ED team from Chennai had come to gather some information with regard to a 10-year-old case and the same was provided to it. The group denied that lookout notices were issued for some directors.
However, both the TDP and Chandrababu Naidu are yet to respond on the incident.
Yalamanchili Satyanarayana Chowdary, popularly known as Sujana Chowdary, is one of the richest MPs in the country. This is the second time in less than two months that the ED is carrying out a search at Chowdary’s properties, as a similar operation was carried out on October 10.
Saturday’s raids come just days after the Andhra Pradesh government withdrew the “general consent” it had earlier given to the CBI to operate within its territory. The CBI now requires the permission of the Andhra Pradesh government to conduct raids in the state.
The move had come following a series of raids by the Income Tax authorities against TDP leaders, including Naidu’s close aide and MP CM Ramesh, who had sought an explanation from the IT department on the searches against the TDP leaders.
The party leaders alleged that the Modi government was misusing central agencies to target them.
With IANS inputs