The notice stated that they were being asked to appear as the CID wants to "facilitate a thorough and effective investigation" of the case.
Published Jun 22, 2023 | 8:49 PM ⚊ Updated Jun 22, 2023 | 8:50 PM
Chairman Ramoji Rao and his daughter-in-law Sailaja Kiran have been named A1 and A2 in the Margadarsi Chit Fund fraud case. (Supplied)
In an attempt to hasten the investigation into the alleged financial irregularities in Margadarsi Chit Fund Private Limited (MCFPL), the Crime Investigation Department (CID) of the Andhra Pradesh police has served a notice to the company’s chairman and media baron Cherukuri Ramoji Rao to appear before its officials at its regional office in Kanna Vari Thota at 10.30 am in Guntur on 5 July.
The notice was issued under Section 41-A(1) of the Code of Criminal Procedure.
It stated that Ramoji Rao, who has been named 1st accused (A1) in the case, was required to be present for questioning before the investigating officer at the CID Regional Office in Guntur, along with the other accused in the case to be examined “collectively and simultaneously”.
The notice stated that he was being asked to appear as the CID wanted to “facilitate a thorough and effective investigation” of the case and to “elicit and obtain clarifying information” from him.
The CID examined Ramoji Rao and his daughter-in-law Sailaja Kiran, who is the managing director of Margadarsi, at her residence on 3 April.
Notice served to Ramoji Rao. (Supplied)
The CID, after being made aware of alleged instances of financial malfeasance in the account books of Margadarsi — through money laundering, siphoning of funds, corporate fraud, and helping ghost subscribers indulge in benami transactions — registered cases under relevant sections of the law against Ramoji Rao, Sailaja Kiran, and others.
The CID’s Additional Director General of Police (ADGP) N Sanjay, in a statement on 20 June, said, “The company indulged in the diversion of funds to its associate companies and other unknown investments clandestinely, laundering money by accepting cash subscriptions in high amounts in violation of various prevailing laws.”
He also said that Margadarsi forced subscribers to park their money with the company, offering interest, which was illegal.
He said that the company inflated cash balances, failed to file mandatory balance sheets as per the Chit Fund Act at the branch level and with the Registrar of Chits at the state level, and did not submit necessary documents to regulators.
Elaborating on the legal action initiated so far, the CID chief said that all the accused, including media baron and Chairman Ch Ramoji Rao, Managing Director Sailaja Kiran, and auditor K Shravan, had been named in seven FIRs filed under various sections.
However, he said that the accused were providing evasive answers and avoiding producing required information and documents either to the chit registrar or the CID.
ADGP Sanjay said that the chit fund company’s assets, to the tune of ₹1,035 crore, had been attached: ₹793 crore on 29 May, and ₹242 crore on 15 June.
The company has been operating 37 branches in Andhra Pradesh and has a total of 108 branches, including in Telangana, Karnataka, and Tamil Nadu, he said.
He added that MCFPL had a total subscriber base of 1.04 lakh, and 2,351 chit groups with a turnover of ₹9,677 crore in the two Telugu states during the 2021-22 financial year.
The statement also said that in violation of the Chit Fund Act, the company diverted subscribers’ money to high-risk stock market speculation such as mutual funds.
Sanjay said the probe so far exposed fudging of books and accounts by window-dressing the balance sheet and by not submitting the required Information.
Instead of cooperating with the investigators, the accused were indulging in defaming and blaming the CID.
The violations and fraudulent methods adopted by MCFPL bear similarities with Satyam Computers, Sahara, and Saradha chits fraud, necessitating a deeper probe into its account books, Sanjay said.
The Satyam Computer Services scandal pertained to the founder and directors of the IT company falsifying the accounts, inflating the share price, and stealing large sums from the firm.
The Sahara case was about the issuance of Optionally Fully Convertible Debentures (OFCD) issued by the two companies of the Sahara India Pariwar, which the Securities and Exchange Board of India (SEBI) claimed to be in its jurisdiction. SEBI questioned Sahara for not seeking its permission.
Sahara claimed that the bonds were hybrid products and, hence, did not come under the jurisdiction of SEBI. The company said that it had permission from the Registrar of Companies (ROC).
Sahara also said that it had already repaid 93 percent of the investors and discharged its OFCD liability to the tune of ₹23,500 crore, and only around ₹2,260.69 crore was pending.
It said that it had already deposited more than ₹12,000 crore which, with interest, swelled to ₹16,000 crore.
The Saradha Group (a consortium of over 200 private companies) financial scandal became a political hot potato after the firm’s Ponzi scheme collapsed in April 2013.
The group collected around ₹20,000-30,000 crore from over 17 lakh depositors before it collapsed.
