ED raids premises of Chadalavada Infratech in Hyderabad

The Directorate of Enforcement (ED) officials on Thursday raided the premises of Chadalavada Infratech Limited (CIL) in Hyderabad and Ongole of Andhra Pradesh. The searches were conducted under the provisions of Prevention of Money Laundering Act (PMLA), 2002 in connection with a bank fraud case against the company and others. The ED officials initiated a probe based on an FIR registered by CBI, ACB, Hyderabad against Chadalavada Infratech Ltd., its director Chadalavada Ravindra Babu and others. The FIR was based on a complaint of loan fraud by State Bank of India, Hyderabad, for siphoning and diversion of funds, cheating and criminal conspiracy resulting in loss of public money to the extent of Rs. 166.93 crore.

Chadalavada Infratech Ltd engaged in execution of power infrastructure projects as an Engineering, Procurement and Construction (EPC) contractor, diverted major part of the loan amount for the purpose other than for which it was sanctioned. ED investigation revealed



that CIL was enjoying credit facilities by availing fund-based and non-fund-based credit facilities from State Bank of India; and that its directors conspired with others and misutilised the loan funds and diverted the same by employing various modus operandi like accommodated letter of credit transactions, round tripping of funds in the form of equity investment, diversion of loan amounts into the accounts of employees/directors and their family members etc.

The ED Investigation revealed that a major portion of the letters of credit were issued to entities opened in the names of relatives and employees without any underlying business. Therefore, huge amounts of funds were diverted. Using the diverted funds, properties were purchased in the name of third parties, directors and family members. During the searches, documents related to properties which are suspected to have been acquired using proceeds of crime, were seized.