The ED has frozen assets worth Rs 143 crore of the company’s MD and CEO, VP Nandakumar, after conducting searches at six premises in Kerala.
NEW DELHI (India CSR): The Enforcement Directorate (ED) has launched a money laundering investigation against Manappuram Finance Limited, a prominent Kerala-based non-banking finance company (NBFC), and its Managing Director and CEO, VP Nandakumar. The ED has frozen assets worth Rs 143 crore of Nandakumar under the Prevention of Money Laundering Act (PMLA), 2002, after conducting searches at six premises in Thrissur, where the company is headquartered.
Allegations of illegal collection of deposits from the public
The case pertains to allegations of money laundering through illegal collection of deposits from the public by Nandakumar through his proprietary firm Manappuram Agro Farms (MAGRO), without RBI approval. The deposits were allegedly collected by Nandakumar at various branch offices of Manappuram Finance Limited, a listed company, through some of its employees.
ED Discovers Nandakumar’s Unauthorized Money Laundering and Illegal Cash Transactions via MAGRO
The ED has claimed that evidence has been recovered regarding money laundering and large-scale cash transactions in the form of public deposits, done by Nandakumar through MAGRO, without RBI approval. The outstanding illegally collected deposits, which are the proceeds of crime, have been detected to be Rs 143 crore. When RBI detected the same and directed to return the amount to the depositors, the accused responded to RBI that they have returned the money to the depositors but ED investigation revealed that there is no proof of repayment or no KYC of the depositors. Deposits of Rs 53 crore are shown to have been returned in cash, but with no proof of repayment or KYC.
Frozen assets include bank balance, shares and immovable properties
The frozen assets include deposits kept in eight bank accounts, investment in listed shares and shares of Manappuram Finance Limited. Various incriminating documents showing money laundering and property documents of 60 immovable properties were also seized during the course of the searches.
The ED has alleged that the proceeds of crime have been diverted and invested by Nandakumar into immovable properties in his name, in his spouse’s name and children’s name and into the shares of Manappuram Finance Ltd.
Company denies wrongdoing, says it follows all regulatory guidelines
Manappuram Finance has acknowledged the searches in a filing with the Bombay Stock Exchange (BSE), stating that it follows all regulatory guidelines and is committed to maintaining high standards of compliance and governance. “The ED is conducting a search at our Registered Office. We are extending full cooperation to the Department, including providing complete information sought by them. As the search is ongoing, we will be able to provide more information on its completion. Manappuram Finance Limited has always adhered to the best practices in corporate governance and compliances,” it said in an exchange filing.
Nandakumar has also obtained an interim stay order from the High Court of Kerala directing him to take prior approval of ED before dealing in his movable properties which were reportedly frozen by the investigating agency.
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