SFIO probes TMC MPís firms for fraud

The Serious Fraud Investigation Office (SFIO) has begun probing two companies of Trinamool Congress MP and businessman K D Singh, who is also a close aide of TMC chief Mamata Banerjee, on suspicion that they raised money in violation of rules.

Singh is the chairman of the Alchemist Group and two of his firms ó Alchemist Capital Ltd and Alchemist Holdings Ltd ó are suspected of raising money from the public on different premises in violation of RBI and SEBI guidelines. His company website describes Singh as "Indian entrepreneur, visionary and statesman". It says the group has 11 companies with over 8,000 employees across India and an asset base of Rs 10,000 crores.

Singh entered the Rajya Sabha as a Jharkhand Mukti Morcha nominee and switched over to Trinamool. He is the party's face in north India and is also spearheading the TMC's foray into Assembly elections in Himachal Pradesh. Singh is also the brain behind the high-decibel campaign by the TMC to make its presence felt in Delhi and Haryana.

Reached for his comment, Singh said he was not aware of the inquiry and the government action appeared to be political vendetta. "I am not aware of any inquiry against any of our companies. Although I have resigned from all positions in the companies, I can tell you that we are a transparent group and I am sure we will provide answers to all questions raised by any government authority," Singh told The Indian Express over phone from Himachal Pradesh.

"Having said that, it is clear that the government action definitely smacks of political vendetta. Now that the TMC has pulled out of the UPA government due to its anti-people policies, such a backlash is not surprising."

Sources told The Indian Express that following preliminary investigation on a "complaint/reference" made by RBI, which was following up on a letter sent by CPI leader and Rajya Sabha member D Raja, the Registrar of Companies (RoC), Delhi, last month concluded that there was a need to investigate thoroughly the activities and financial transactions of the two companies.

Union Corporate Affairs Minister M Veerappa Moily is learnt to have given the go-ahead for the investigation.

In a report sent to the Corporate Affairs Ministry last month, the RoC's Regional Director (Northern Region), said that during a preliminary inquiry, Alchemist Infra was asked about inviting deposits from the "public by issue of brochures and offering various schemes like allotment of residential plots, debentures, etc".

After the RoC sought information from the company, the firm asked for a month's time to furnish the same, the report said. "The one month time has elapsed. RoC has requested Directorate to accord sanction of filing of prosecution under Sections 234 (4) of the Act. Directions to take necessary action u/s 234 (4) for violation of Section 234 (1) has been issued to RoC," says the note sent by Deputy Director (Inspection) R K Bakshi.

It adds that the company raised Rs 449.41 crore from the public until March 31, 2010, which "swelled to a level" of Rs 1,087.69 crore as on March 31, 2011.

"Further stated that the company has diverted such funds received from the public by way of granting advances (balance as at 31.3.2011 is Rs 806.61 crore) and the company is having cash and bank balances to Rs 242.54 crore as at 31.3.2011, out of which 215.65 crore are stated to be in fixed deposit with banks (sic)," Bakshi says.

Making out a case against the company for having "collected funds on false promises, given fictitious certification on the basis of non-existing land" and for not being "in a position to deliver the said property to the depositors, the note warns that "the company has made false promises and there is every possibility that alternatively the public shall not get due returns on maturity".

He also refers to the comments by the RoC, which said that there was a possibility of a "large, well-planned, collusive financial impropriety, financial and accounting irregularities".

In its report of August 28, the RoC had also said that Alchemist Capital and Alchemist Holdings had raised hundreds of crores of rupees from the public by way of preferential shares, observing that the "possibility of contraventions of Sections 67(3) and 73 of the Act and similar modus operandi of engaging agents, etc, cannot be ruled out".

"In view of the above, it appears to be fit case for according sanction to conduct investigation of M/S Alchemist Infra Realty Ltd under the provision of Section 235 of the Act, if approved. Further, RoC may also be directed to conduct scrutiny of M/S Alchemist Capital Ltd and M/S Alchemist Holdings Ltd, the two group companies of Alchemist Group of Companies and to submit its report through the Directorate (NR). RoC may also be asked to issue SCN (show-cause notice) for apparent violations of Section 67(3) read with 73 of the Act," the note said.

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