The officials from the Directorate of Enforcement (ED) provisionally attached under the Prevention of Money Laundering Act-2002 assets worth ₹134.02 crore in the form of 1,000 Non-Convertible Redeemable Preference Shares of KFin Technologies Ltd. (KFintech). The total attachment in this case stands at ₹2,229.56 crore, according to the officials.
The shares were held in the name of Adhiraj Parthasarathy, son of C. Parthasarathy, the CMD of Karvy Stock Broking Ltd. (KSBL).
ED had initiated a probe following FIRs registered by the Central Crime Station (CCS) of Hyderabad, alleging that KSBL availed of loans by illegally pledging its clients’ shares worth about ₹2,800 crore and did not repay the loans. The loans were subsequently declared as NPA and as fraud accounts.
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The funds were diverted to related companies such as Karvy Data Management Services Ltd. and Karvy Realty India Ltd.. The diverted loan funds were routed via multiple defunct NBFCs to Karvy Financial Services Limited (an NBFC of the Karvy Group).
The investigation by ED also revealed that C. Parthasarathy had special privilege rights to subscribe to additional equity shares of KFintech at a predetermined price as per the shareholders agreement, dated August 3, 2017. In consideration for the termination of the shareholders’ agreement and extinguishment of all such rights, KFintech allotted 1,000 Non-Convertible Redeemable Preference Shares in the name of Adhiraj Parthasarathy at par on October 25, 2021.
“Parthasarathy and his concerns had made an arrangement that the said consideration from KFintech are taken in the name of Adhiraj Parthasarathy as he is not an accused in the FIRs. Further, the said property in the form of Redeemable Preference Shares were concealed by Adhiraj Parthasarathy and were not deliberately disclosed in his submissions made before the ED during the course of investigation,” said the officials.
