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Note ban: ED arrests Sekhar Reddy, 2 others in money laundering case

LiveMint logoLiveMint 21-03-2017 PTI

Chennai: The ED has arrested sand mining baron J.Sekhar Reddy and his two alleged associates in connection with one of the biggest black money and money laundering cases booked post demonetisation.

Officials said the agency arrested Reddy, K. Sreenivasulu and Prem Kumar on Monday under provisions of the Prevention of Money Laundering Act (PMLA) after they were called for questioning at the Enforcement Directorate (ED) office in Chennai.

The agency said it has “reasonable belief that these three persons are involved in money laundering.” The three were later produced in a court which sent them to jail till 28 March. They are now lodged in the Puzhal central jail, they added.

Reddy was earlier arrested by the Central Bureau of Investigation (CBI) too in the same case of alleged black money generation post demonetisation and was out on bail.

A total of five people have now been arrested in this case by the ED as it had earlier nabbed Mahavir Hirani and Ashok Jain in December last year.

The agency had filed a criminal complaint against Reddy and others based on a CBI FIR (first information report) in the case which was registered after the income tax department first searched his and his associates’ premises in November, 2016.

The ED in a statement said Reddy told it that “cash seized by the I-T department belongs to his SRS mining company and he admitted that it was unaccounted money.

“He has not divulged the actual source of new currencies other than stating that it is from the sand mining business. He stated that the seized 177kg gold bars belong to him and the same was procured through Prem Kumar,” it said.

The I-T department has made one of the biggest detection of alleged unaccounted income of over Rs142 crore in this case with the seizure of Rs34 crore in new notes, post demonetisation.

The Reddy case and the other involving Delhi-based lawyer Rohit Tandon and Kolkata-based businessman Paras Mal Lodha are being probed by at least four agencies — the ED, the I-T department, the CBI and Delhi Police, and are considered the most high-profile black money cases being investigated in the aftermath of the notes ban.

Prem Kumar, the agency said, told them that he supplied gold bars of 1kg to Reddy. “He (Kumar) stated he used to receive demonetised currencies for procuring gold bars through Srinivasulu, an associate of Reddy. He also stated that the seized 30 kgs of gold bars in his premises also belong to Reddy only.

“Srinivasulu has stated that he used to receive money from SRS mining and used to use a part of the same for converting into gold bars through Prem Kumar as per the instructions of Reddy. Remaining cash was kept at various premises and the same was earlier recovered and seized by the I-T department,” it said.

The agency said further probe in the case is in progress and Srinivasulu has “not divulged the modus operandi of converting old currencies into new.”

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