ED Asset Seizure RKM Powergen – ED Seizes Assets Worth Over ₹1,900 Crore from RKM Powergen in Money Laundering Probe
Chennai: The Directorate of Enforcement (ED) has ordered the freezing of fixed deposit receipts (FDRs) and mutual funds amounting to ₹912 crore, along with immovable assets worth approximately ₹1,000 crore, belonging to RKM Powergen Private Limited. The company, owned by Andal Arumugam, S. Arumugam, and others, is under investigation for alleged financial irregularities under the Prevention of Money Laundering Act (PMLA), 2002.
In a press release issued on Tuesday, the ED stated that its investigation is based on a First Information Report (FIR) filed by the Central Bureau of Investigation’s Economic Offences Wing (EOW) in New Delhi. The case pertains to the alleged fraudulent allocation of the Fatehpur East Coal Block in Chhattisgarh by the Union Ministry of Coal for power generation purposes.
Loan Misuse and Fund Diversion
According to investigators, RKM Powergen secured a loan from the Power Finance Corporation (PFC) using the coal block allocation as collateral. A substantial amount—₹3,800 crore—was then transferred to a foreign entity, MIPP, which is linked to RKM Powergen. The funds were allegedly utilised to acquire the coal block through an overvaluation of plant and machinery, leading to suspicions of financial misappropriation.
Round-Tripping of Funds
Further investigations revealed that RKM Powergen issued 26% of its shares to Malaysia-based Mudajaya Corporation Bhd. and 10.95% to Enerk International Holdings Limited at a premium of ₹240 per share. However, the remaining 63.05% of shares were allotted to RKM Powergen at face value. Investigators found discrepancies in the valuation process, as the fair valuation assessment by auditors was not consistently applied.
Scrutiny also revealed that Mudajaya Corporation financed its ₹240 per share premium using funds originally sanctioned by PFC for equipment procurement. These funds were routed through MIPP, a foreign entity, before being funneled back to RKM Powergen under the guise of equity participation. This effectively enabled a round-tripping scheme, with an estimated ₹1,800 crore being diverted through foreign entities.
Seizure of Evidence
During search operations, ED officials seized multiple mobile phones and electronic devices containing incriminating evidence related to the case. The agency is now analysing the recovered data to further establish the extent of financial misconduct.
The investigation is ongoing, and further actions are expected as the authorities probe deeper into the alleged financial irregularities.
For businesses navigating complex financial regulations and compliance matters, ensuring that all activities align with legal standards is crucial. Our expert team provides support issues, related to financial misconduct, asset seizures, and compliance under the Prevention of Money Laundering Act (PMLA). Reach out for trusted legal guidance to manage investigations and maintain operational integrity.
- ED Seizes ₹1,900 Crore Assets of Rkm Powergen in Major Action - February 5, 2025
- Budget 2025 Impact: Consumer Goods Firms Eye Growth Opportunities - February 4, 2025
- Government Reconsidering Cryptocurrency Position: Latest Update - February 3, 2025
