₹200 crore, 40 PSUs: ED uncovers CSR racket, funds routed through trusts promoted by Class XII dropout

The Enforcement Directorate has uncovered a racket in which corporate social responsibility (CSR) funds from at least 40 public sector undertakings (PSUs) and government banks were allegedly routed through charities and returned to donors in cash after a commission was deducted, The Times Of India reported on Wednesday.

The agency said the racket involved corporate houses, hospitals, public sector companies and government banks, with top executives of PSUs allegedly receiving bribes for releasing CSR funds. The funds were routed through multiple trusts promoted by Dharmendra Kumar Chandradev, a Class XII dropout who allegedly impersonated a medical doctor for close to three decades.

According to the ED, Chandradev received CSR donations through multiple trusts registered for the purpose of laundering money meant for charity and exempted from taxation. The funds were then returned to the "donor" in cash after retaining his commission.

"The CSR mechanism was utilised as a conduit for conversion of accounted funds into unaccounted cash. Funds amounting to Rs 200 crore have been routed through the above mechanism," the Enforcement Directorate was quoted as saying by The Times of India, citing its preliminary investigation.

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The agency said its probe further found that CSR contributions from corporate houses were "returned substantially in cash" to the contributors after deduction of a small commission.

Searches across four regions

On October 1, the central agency carried out searches at eight locations across Maharashtra, West Bengal, Gujarat and Delhi-NCR in connection with the bogus donation cases.

During the searches, the ED seized evidence and details of transactions involving PSU executives and corporate hospitals. It also recovered Rs 21 lakh in unaccounted cash.

The searches also revealed a network of agents and intermediaries who channelled CSR funds to the trusts. The funds were subsequently routed through shell entities controlled by market operators. Most of these entities have also been flagged in multiple GST fraud investigations.

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40 PSUs and public sector banks involved

The ED said, "At least 40 PSUs and public sector banks across the country have provided CSR donations to the trusts operated by the accused."

"Several projects were only partially executed or not executed in proportion to the funds received," the agency said. It added that vendor bills were inflated and excess funds were routed through bogus or shell entities.

"Kickbacks and commissions were allegedly paid to intermediaries facilitating the CSR funding," the ED said.

The agency's preliminary investigation indicates that the CSR funds were used as a channel to convert accounted corporate funds into unaccounted cash, with a substantial portion of the contributions allegedly being returned to the original contributors after commissions were deducted.