'ED froze Manappuram shares worth Rs 2,000 cr and attributing value of Rs 140 cr': MD & CEO
'I am reviewing my legal options in this matter,' says V P Nandakumar in a letter to company's Board of Directors
- May 5, 2023,
- Updated May 5, 2023 11:24 AM IST
Kerala-based NBFC Manappuram Finance Ltd on Friday said Enforcement Directorate's freeze on assets of MD & CEO V P Nandakumar includes freeze on 19.29 cr shares held by him.
"The shares that have been frozen by the ED are worth approximately Rs 2,000 crore, but the value attributed to them is around Rs 140 crore. I am reviewing my legal options in this matter," said Nandakumar in a letter to company's Board of Directors, which was shared with stock exchanges on Friday.
He said, in his letter, the total amount of pending deposits to which the matter pertains is less than Rs 10 lakh, which is lying in escrow account.
At 1050 am on Friday, the company's shares were trading 13% lower at Rs 103.6.
The Enforcement Directorate on Thursday said it has frozen assets worth Rs 143 crore of Nandakumar after it conducted raids as part of a money laundering investigation.
A total of six premises in Thrissur, where the company is headquartered, were covered during the searches that were launched on Wednesday.
The case pertains to allegations of money laundering through ''illegal'' collection of deposits from the public, the agency said in a statement.
During the course of searches, the ED said, it was found that the proceeds of crime have been ''diverted and invested'' by V P Nandakumar into immovable properties in his name, in the name of his spouse and children and into the shares of Manappuram Finance Ltd.
''Hence, ED has freezed the assets of V P Nandakumar under the Prevention of Money Laundering Act (PMLA), totalling Rs 143 crore,'' it said. The frozen assets include deposits kept in eight bank accounts, investment in listed shares and shares of Manappuram Finance Limited, the agency said.
Various ''incriminating'' documents showing money laundering and property documents of 60 immovable properties were also seized during the course of the searches, it said.
It claimed that ''evidence'' regarding money laundering and large-scale cash transactions in the form of public deposits, done by V P Nandakumar through his proprietary firm Manappuram Agro Farms (MAGRO), without RBI approval, have been recovered. The deposits were ''illegally'' collected by Nandakumar at various branch offices of Manappuram Finance Limited, a listed company, through some of its employees, it said.
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''The outstanding illegally collected deposits, which are the proceeds of crime, have been detected to be Rs 143 crore. When RBI detected the same and directed to return the amount to the depositors, the accused have responded to RBI that they have returned the money to the depositors but ED investigation revealed that there is no proof of repayment or no KYC of the depositors,'' the ED alleged.
However, Nandakumar said on Friday that "the alleged matter of the deposits has already been examined in detail by all the concerned regulators".
"I was the sole proprietor of a concern called Manappuram Agro Farms (“Magro”) until 2015-16, which was primarily engaged in the non-financial services business of agriculture (including eco-farming) in Thrissur. Magro used to accept deposits from people residing at Valapad and its neighbouring areas where my family has done business for over 60 years. It would pay interest on these deposits and use the funds so raised in its primary business of agriculture.
"The total quantum of deposits outstanding as on 1st Feb 2012 was Rs 143.85 crore, which was fully and duly accounted for in Magro’s books. Since the principal business of Magro was agriculture, it accepted deposits in the bona fide belief that this was permissible under law. However, based on communications from the RBI in 2012, Magro stopped accepting, renewing and soliciting deposits. d. Eventually, Magro decided to repay all its deposits... All subsequent repayments to the depositors were to be made out of the escrow account through banking channels. Monthly report of progress of repayment of deposits were collected by RBI and their latest inspection report mentions that as of September 30, 2022 only Rs 9.29 lakh was outstanding to be repaid which was kept in an escrow pending receipt of claims by the relevant depositors," said Nandakumar in his letter on Friday.
Deposits of Rs 53 crore are shown to have been returned in cash, but with no proof of repayment or KYC, it said.
The agency said that the role of the chief finance officer (CFO) of Manappuram Finance Limited and other employees, who are suspected to have assisted in the offence of money laundering, are being investigated. Manappuram Finance Ltd, a non-banking financial company (NBFC), offers a string of products like online gold loan, micro-home finance, forex and money transfer, business loan, secured personal loan among others.
Kerala-based NBFC Manappuram Finance Ltd on Friday said Enforcement Directorate's freeze on assets of MD & CEO V P Nandakumar includes freeze on 19.29 cr shares held by him.
"The shares that have been frozen by the ED are worth approximately Rs 2,000 crore, but the value attributed to them is around Rs 140 crore. I am reviewing my legal options in this matter," said Nandakumar in a letter to company's Board of Directors, which was shared with stock exchanges on Friday.
He said, in his letter, the total amount of pending deposits to which the matter pertains is less than Rs 10 lakh, which is lying in escrow account.
At 1050 am on Friday, the company's shares were trading 13% lower at Rs 103.6.
The Enforcement Directorate on Thursday said it has frozen assets worth Rs 143 crore of Nandakumar after it conducted raids as part of a money laundering investigation.
A total of six premises in Thrissur, where the company is headquartered, were covered during the searches that were launched on Wednesday.
The case pertains to allegations of money laundering through ''illegal'' collection of deposits from the public, the agency said in a statement.
During the course of searches, the ED said, it was found that the proceeds of crime have been ''diverted and invested'' by V P Nandakumar into immovable properties in his name, in the name of his spouse and children and into the shares of Manappuram Finance Ltd.
''Hence, ED has freezed the assets of V P Nandakumar under the Prevention of Money Laundering Act (PMLA), totalling Rs 143 crore,'' it said. The frozen assets include deposits kept in eight bank accounts, investment in listed shares and shares of Manappuram Finance Limited, the agency said.
Various ''incriminating'' documents showing money laundering and property documents of 60 immovable properties were also seized during the course of the searches, it said.
It claimed that ''evidence'' regarding money laundering and large-scale cash transactions in the form of public deposits, done by V P Nandakumar through his proprietary firm Manappuram Agro Farms (MAGRO), without RBI approval, have been recovered. The deposits were ''illegally'' collected by Nandakumar at various branch offices of Manappuram Finance Limited, a listed company, through some of its employees, it said.
ALSO WATCH: Hot stocks on May 5, 2023: Adani Transmission, Adani Wilmar, Manappuram Finance, AGI Greenpac, and more
''The outstanding illegally collected deposits, which are the proceeds of crime, have been detected to be Rs 143 crore. When RBI detected the same and directed to return the amount to the depositors, the accused have responded to RBI that they have returned the money to the depositors but ED investigation revealed that there is no proof of repayment or no KYC of the depositors,'' the ED alleged.
However, Nandakumar said on Friday that "the alleged matter of the deposits has already been examined in detail by all the concerned regulators".
"I was the sole proprietor of a concern called Manappuram Agro Farms (“Magro”) until 2015-16, which was primarily engaged in the non-financial services business of agriculture (including eco-farming) in Thrissur. Magro used to accept deposits from people residing at Valapad and its neighbouring areas where my family has done business for over 60 years. It would pay interest on these deposits and use the funds so raised in its primary business of agriculture.
"The total quantum of deposits outstanding as on 1st Feb 2012 was Rs 143.85 crore, which was fully and duly accounted for in Magro’s books. Since the principal business of Magro was agriculture, it accepted deposits in the bona fide belief that this was permissible under law. However, based on communications from the RBI in 2012, Magro stopped accepting, renewing and soliciting deposits. d. Eventually, Magro decided to repay all its deposits... All subsequent repayments to the depositors were to be made out of the escrow account through banking channels. Monthly report of progress of repayment of deposits were collected by RBI and their latest inspection report mentions that as of September 30, 2022 only Rs 9.29 lakh was outstanding to be repaid which was kept in an escrow pending receipt of claims by the relevant depositors," said Nandakumar in his letter on Friday.
Deposits of Rs 53 crore are shown to have been returned in cash, but with no proof of repayment or KYC, it said.
The agency said that the role of the chief finance officer (CFO) of Manappuram Finance Limited and other employees, who are suspected to have assisted in the offence of money laundering, are being investigated. Manappuram Finance Ltd, a non-banking financial company (NBFC), offers a string of products like online gold loan, micro-home finance, forex and money transfer, business loan, secured personal loan among others.