Kochi, Jul 25 (PTI) The ED, in a report filed before the Adjudicating Authority in the money laundering case against Kochi-based CMRL, has said that the company's former managing director admitted that payments were made to Veena T because of her personal relationship with the then Kerala Chief Minister Pinarayi Vijayan.

The probe relates to allegations that CMRL paid Rs 2.78 crore to Exalogic Solutions Pvt Ltd, a company owned by Vijayan's daughter Veena, without receiving any services in return.

The ED filed the report before the Adjudicating Authority seeking attachment of the properties of the accused in the case.

According to the report, S N Sasidharan Kartha, the founder and former Managing Director of Cochin Minerals and Rutile Ltd, exercised absolute control over the company and orchestrated a layered scheme to misappropriate Rs 182 crore over a period of 15 years.

The report alleged that the scheme involved fictitious cash expenses of Rs 139 crore booked under "Sludge Handling and Transportation Expenses" using self-generated vouchers without any supporting invoices or actual services. It also alleged that another Rs 43 crore was siphoned off through inflated invoices raised by known vendors, who allegedly withdrew the excess amount in cash and returned it to CMRL officials after deducting their commission.

"This is nothing but circular payments made from CMRL bank accounts and taken back from vendors in cash by Kartha and others," the report said.

The Enforcement Directorate further alleged that Rs 2.78 crore in bogus expenses was booked in the name of software services and paid to Veena and her company, Exalogic, without any services being rendered to CMRL.

Referring to Kartha's statement recorded under Section 50 of the Prevention of Money Laundering Act on April 17, 2024, the report said he admitted that funds were transferred to vendors, who withdrew the money in cash and returned it to him or his associates without any genuine expenditure being incurred.

"He admitted that payments were made to Veena and Exalogic despite no services being rendered, citing her personal relationship with the then Kerala Chief Minister Pinarayi Vijayan," the report said.

The report alleged that the sham payments of Rs 2.78 crore for non-existent ERP services were corroborated by statements from Kartha and others, including Veena, who admitted that no deliverables had been provided to CMRL.

"Veena could not provide any evidence of tangible work carried out for CMRL in place of the Rs 2.78 crore received in the name of IT consultancy services," the report said.

The ED alleged that Exalogic operated with a fragile financial base, with a negative net worth of Rs 66 lakh and a standalone business turnover of just Rs 5 lakh, making its financial existence almost entirely dependent on funds received from CMRL.

It further alleged that Empower India Capital Investments Private Limited, a non-banking financial company owned and operated by Kartha, extended loans totalling Rs 50 lakh to Exalogic.

"Despite Exalogic's failure to repay the loan under normal commercial terms, bank statements reveal that the funds received from CMRL were siphoned out of Exalogic's account through direct RTGS transfers," the report said.

Neither CMRL, Veena nor Vijayan had responded to the allegations at the time of filing this report.

Veena's husband and MLA P A Muhammad Riyas declined to comment when reporters sought his response on Saturday.

"I cannot say what is not known to me. We are cooperating with the investigation. Nothing more can be said about it," he told reporters.

The agency had earlier alleged that Veena and the CMRL management, led by Kartha, generated "proceeds of crime" through these transactions.

The ED has questioned Veena and members of the CMRL board on multiple occasions as part of the investigation.

The agency registered the case under the PMLA based on a prosecution complaint filed by the Serious Fraud Investigation Office before a court in Kochi.

The SFIO is the investigation arm of the Ministry of Corporate Affairs.

CMRL came under the scanner of central agencies after an Income Tax Department raid in January 2019 allegedly unearthed financial irregularities, including suspected fictitious expenditure of around Rs 130 crore. PTI TBA SSK

Money-laundering investigation examines alleged fictitious expenses, circular vendor payments, and consultancy payments without services or deliverables. A money-laundering investigation alleges misappropriation through fictitious expense entries, unsupported vouchers, and inflated vendor invoices used to withdraw funds in cash. The Enforcement Directorate further alleges that payments described as software or IT consultancy expenses were made to Exalogic Solutions Pvt Ltd and Veena T without services or deliverables. The report cites statements concerning the alleged sham payments, Exalogic's dependence on company funds, and subsequent transfers from its account. The PMLA case is based on a prosecution complaint concerning suspected financial irregularities.