ED Attaches Rs 48.71-Cr Properties of Transstroy

Hyderabad: The Enforcement Directorate (ED), Hyderabad, said it had provisionally attached Rs 48.71 crore worth of land and residential properties of Transstroy (India) Ltd. (TIL) under the provisions of Prevention of Money Laundering Act (PMLA), 2002, in connection with an ongoing bank fraud investigation.

In a press release on Tuesday, the ED stated that the investigation began after an FIR was registered by the ACB and CBI-Hyderabad, under the IPC and the Prevention of Corruption Act (1988).

According to the statement, Transstroy availed loans and credit facilities from a consortium of banks but failed to use the funds for their intended purpose. These loan accounts turned into non-performing assets (NPAs) due to irregularities such as frequent devolvement of letters of credit (LCs), non-payment of interest on working capital and failure to route operations through consortium banks. The borrowed funds were diverted to group companies, shell entities and entities controlled by Transstroy's promoters and directors.

The ED said its investigation revealed that Transstroy, through fictitious high turnover, bogus sales and purchase transactions with its associated and shell entities, fraudulently obtained credit facilities and diverted the funds via accommodated LCs, resulting in a loss of Rs 5,115 crore (including interest) to the consortium banks.

Further investigation uncovered that the company’s directors and promoters established several shell entities, appointing dummy directors to facilitate fund diversion and layering of proceeds. The investigation also found bogus invoices for vehicles used in steel transport.

ED also traced Rs 85.90 crore withdrawn in cash from bank accounts of Transstroy and related entities, which were used by promoters and directors for personal gain. The funds were used to acquire immovable properties, which were then transferred to family members to shield them from attachment by law enforcement agencies.

The attached properties include land parcels transferred by one of the directors to family members, as well as residential properties belonging to an entry provider involved in the diversion of funds. Further investigation is ongoing.