ED Seizes Documents Of Several Shell Companies, Cash & Jewellery During Search Operation In Money Laundering Probe Involving Amtek Group

Mumbai: The Enforcement Directorate (ED) seized documents of several hundred shell companies used to hold and invest in high-value real estate and luxury properties, a substantial amount of cash and jewelry, several benami company documents, hundreds of property documents, and incriminating evidence related to the siphoning of loan funds during a search operation at 40 locations in Delhi NCR, Gurugram, Mumbai, and Nagpur under the Prevention of Money Laundering Act (PMLA). This was part of a money laundering investigation involving the Amtek Group and its directors, including Arvind Dham and Gautam Malhotra, in connection with a bank fraud case exceeding Rs. 25,000 crore involving more than 15 public and private sector financial institutions.  

On June 20th, the ED conducted searches at both the business and residential premises of the Amtek group and their directors.   

According to an ED official statement, during the search operations, the ED recovered cash worth Rs. 2.53 crore held in hidden private lockers and jewelry valued at over Rs. 1.1 crore. The financial probe agency allegedly identified several benami companies with high-value real estate assets worth more than Rs. 1000 crore. The investigation into the trail of proceeds of crime (POC) allegedly revealed that the group had made peons, drivers, housekeeping staff, and security guards directors in hundreds of companies holding assets, whose beneficial ownership was traced back to the promoters of M/s Amtek Auto group. Furthermore, properties were sold at nominal values to their own sister concerns to conceal the proceeds of crime and project them as untainted. Several assets in foreign holding companies were written off, causing wrongful losses to a consortium of banks. The searches also resulted in the seizure and recovery of hundreds of property documents and incriminating documents related to the siphoning of loan funds.   

The ED initiated the investigation based on FIRs registered by the CBI arising from complaints by IDBI Bank and Bank of Maharashtra. The allegations include diverting bank loans through cheating, fraud, and criminal breach of trust, causing wrongful loss to the banks under various sections of the IPC, 1860, and the Prevention of Corruption Act, 1988, amounting to Rs. 673.35 crore. The Supreme Court, while deciding a Public Interest Petition against M/s Amtek Auto group of companies, directed the ED, armed with extensive mechanisms, to investigate the case, which may lead to uncovering money laundering offenses punishable under the PMLA, 2002.  

The ED investigation revealed that the Amtek group had allegedly defaulted on loans exceeding Rs. 25,000 crore from more than 15 banks. The group companies, namely M/s ARG Limited, M/s ACIL Limited, M/s Amtek Auto Limited, M/s Metallic Forging Limited, and M/s Castex Technologies Limited, along with other group concerns, were taken to insolvency, whose resolution led to a huge haircut of more than 80% for the banks, causing substantial losses to the financial system.

The financial probe agency said that during the investigation, a complex web of more than 500 shell companies was deployed by the group to hold and invest in high value real estate and luxury properties. None of the companies were declared as related parties failing many regulatory mechanisms. Investigations have also revealed that Amtek Auto group not only fraudulently diverted the loans, but also window dressed the financial statements filed with stock markets, created bogus assets in their books of accounts with the collusion of auditors, and finance professionals. At the time of resolution, it has been revealed that the overall bogus plant and machinery of group companies was exceeding Rs.10,000 Crore in their respective Balance Sheets.