Eenadu Group and its founder Ramoji Rao have often come under criticism by YSRCP chief and Chief Minister YS Jagan Mohan Reddy.
Published Mar 12, 2023 | 7:13 AM ⚊ Updated Mar 12, 2023 | 7:13 AM
Following the registration of the FIRs, multiple teams of the CID launched searches on the premises of various MCPL branches. (Creative Commons)
Andhra Pradesh Crime Investigation Department (CID) registered multiple FIRs across the state in the alleged chit fund fraud committed by the Ramoji Group-owned Margadarsi Chit Fund Pvt Ltd (MCPL) and launched an investigation.
Though the FIRs were registered on Friday, 10 March, they came to light only on Saturday. CID, in the FIRs registered, named media baron Cherukuri Ramoji Rao, chairman of MCPL, his daughter-in-law and MCPL Managing Director Sailaja Cherukuri, and branch managers.
Acting on complaints by the Assistant Registrars of Chits, FIRs were lodged in Visakhapatnam, Kakinada, Eluru, Vijayawada, Guntur, Palnadu, Kurnool, and Ananthapuramu.
FIRs were registered under Sections 120(B), 409, 420, 477(A), read with Section 34 of the Indian Penal Code, Section 5 of the Andhra Pradesh Protection of Depositors in Financial Establishments Act, 1999, and Sections 76 and 79 of the Chit Funds Act,1982.
Following the registration of the FIRs, multiple teams of the CID launched searches at the premises of MCPL at Visakhapatnam, Rajamahendravaram, Eluru, Vijayawada, Guntur, Narasaraopet and Ananthapuramu branches on Saturday.
“The foremen of these branches are being questioned about the alleged fraud and statements are being recorded. All the records are being examined and incriminating documents are being seized. The foremen of the Narasaraopet, Eluru, and Ananthapuramu branches are absconding. The search process is still going on,” said a senior official of the CID.
Eenadu Group and its founder Ramoji Rao have often come under criticism by YSRCP supremo and Andhra Chief Minister YS Jagan Mohan Reddy.
The chief minister has often alleged that a gang of four (Dushta Chatustayam), including Ramoji Rao, was trying to destabilise his government to aid the Opposition N Chandrababu Naidu-led TDP to return to power.
The Stamps and Registration Department — being the regulating authority of the Chit Fund Business — conducted inspections/searches on branches of MCPL during October and November last year, along with other chit fund companies.
During the search, non-cooperation of the foreman and their staff was noticed and several irregularities and violations of rules and regulations were unearthed, said the CID official.
The inspection teams found non-payment of monthly subscriptions/installments in respect of multiple tickets held in the name of MCPL, which were later substituted with new subscribers.
Also, the foreman, instead of depositing the future subscription amount into the second account as per the provisions of Section 22, was transferring the said amount to the Corporate Office Account and, in turn, issuing a “receipt” carrying interest at 4-5 percent in the name of the subscriber.
“Non-disclosure of revenue and expenditure accounts, statement of assets and liabilities, and details of investment as per Rule 28, read with Section 24 of the Chit Fund Act, has also been noticed,” said the CID.
Further, in view of the serious lapses observed at the branch offices of the MCPL and as no sufficient data was made available, a search was also conducted at the company’s corporate office in Hyderabad from 14 to 16 December last year.
Later, the Registrar of Chits engaged a qualified chartered accountant to assist in verifying the financial statements submitted by the MCPL.
In preliminary findings, the chartered accountant noted that the prescribed chit-wise balance sheet and profit and loss statements were not being maintained or submitted; and an amount of ₹459.98 crore is shown in Note 7 of the balance sheets as investments.
On perusal of the said Note 7, it is seen that the company has invested in mutual funds, government securities, and equity instruments, both quoted and unquoted including subsidiaries and associates, stated the FIR.
“In Note 40 – Related Parties, the company has disclosed a list of three subsidiaries — Margadarsi Chits Private Limited, Chennai, Margadarsi Chits (Karnataka) Private Limited, Bengaluru, and Ushakiron Media Private Limited, Hyderabad. On examination of the list of shareholders (as of 31 March 2022) of each of these companies, filed on the MCA portal, it is seen that in Ushakiron Media Private Limited alone the amount of share capital invested by the company is ₹2 crore (amounting to 88.5 percent of the paid-up capital). However, in Note 7 of the financial statements, the amount invested in subsidiaries is stated to be ₹1,05,80,000 only — both as of 31 March 2022 and 31 March 2021,” said the CID FIR.
While the first two companies are also engaged in the chit-fund business, Ushakiron Media is not.
According to Section 12 of the Chit Fund Act, 1982, except with the general or special permission of the state government, no company carrying on chit business shall conduct any other business.
Considering the fact that the company holds substantial voting power (88.5 percent), which makes it a subsidiary, it can be said that the company is carrying on other business through the subsidiary, a CID official said.
“In view of the above findings, which are grave in nature, including the diverting of the subscribers’ money to mutual funds/speculative markets for their personal gain and indulging in the commission of offenses under various provisions of law, Assistant Registrars lodged complaints with the CID. The CID immediately registered the cases and, in pursuance of the FIRs, commenced the investigation of the cases,” explained the CID.
