Mumbai: Bogus work contracts for supposed real estate development with nine companies, and parking surplus funds of the Mumbai airport to raise loans for GVK Group companies are among the alleged grounds on which the Central Bureau of Investigation (CBI) registered a case of fraud against GVK Group promoters and others.
The CBI has accused the GVK promoters and unknown officials of the Airport Authority of India (AAI) for allegedly siphoning off at least Rs 705 crore from funds meant for development of the Mumbai airport, and causing huge losses to the government exchequer.
The Mumbai airport is run by the Mumbai International Airport Limited (MIAL), a joint venture company between AAI and GVK Airport Holdings Limited, a GVK Group company.
The CBI also charged the GVK promoters for getting employees of group companies unrelated to the airport on its payroll, and giving undue monetary advantage to family members and revenues at the cost of the airport’s top line.
It registered these offences against GVK Group chairman G.V.K. Reddy, his son Sanjay Reddy, unknown public servants, and the MIAL for alleged fraud, cheating, forgery and criminal misconduct.
According to the CBI, the FIR dated 27 June is based on information received from a “reliable source”.
Under the joint venture agreement between AAI and GVK, MIAL is required to share 38.5 per cent of its annual revenue with AAI, while its balance earnings are to be used in modernisation, operation and maintenance of the Mumbai airport.
CBI sources said the probe agency conducted searches at six locations Wednesday but hasn’t made any arrest or detention yet.
A spokesperson for MIAL said, “MIAL is surprised to note the registration of case by CBI against MIAL and others. MIAL would have provided every assistance had the agency sought explanation or any document even if a preliminary enquiry had been initiated. MIAL is a transparent and responsible corporate entity which is committed to co-operate with the agency in its investigation to arrive at the truth.”
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Bogus contracts
According to the FIR, the AAI gave a land parcel of 200 acres in Mumbai to MIAL to develop and generate revenues. MIAL is accused of entering into fake contracts with at least nine companies in 2017-18 under the guise of developing these land parcels. All nine companies are named as accused in the FIR.
“MIAL transferred the funds to them, but these contracts have never been executed on ground and the transactions were only in papers,” the FIR said, adding that Rs 310 crore was allegedly siphoned off this way causing “wrongful loss to the AAI and corresponding wrongful gain to themselves”.
Quoting its source, the CBI said there are many more such bogus contracts embezzling MIAL funds.
Surplus MIAL funds used to raise loans for GVK firms
From 2012 onward, promoters of GVK Group forged board meeting resolutions of the MIAL authorising to keep surplus funds of the Mumbai airport company as fixed deposit reserves in a Hyderabad branch of Bank of India, said the FIR.
“GVK Group raised loans/overdraft facilities against these FDRs and used these funds for the benefit of their Hyderabad-based GVK Group companies at the expense of MIAL,” the CBI said in the FIR.
The agency alleged that the GVK Group promoters this way used MIAL surplus funds of almost Rs 395 crore and caused losses to the AAI with criminal intention.
Manipulating payrolls, unduly favouring family, relatives
Quoting the unnamed source, the CBI said the GVK promoters embezzled over Rs 100 crore from MIAL by shifting some staff from their head office and group companies on MIAL payrolls.
These employees were allegedly unrelated to the functioning of MIAL.
The promoters are also accused of giving away premium retail area at the Mumbai airport at low prices to companies owned by family members and employees such as Rockline Solutions Private Ltd and International Hotels and Resorts Pvt. Ltd, the FIR said.
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