Days after CBI FIR, ED also registers money laundering cases against GVK Group & others

The Enforcement Directorate on Tuesday, July 7, registered a case of money laundering against the GVK Group, its Chairman GVK Reddy, his son GV Sanjay Reddy, the Mumbai International Airport Ltd. (MIAL) and several others. The ED's probe is based on the CBI FIR dated June 27 in which 13 individuals and entities were named in connection with irregularities worth over Rs.800 crore for the development of the Mumbai Airport. The ED is likely to start examining the accounts of the GVK companies and transfer of funds to ascertain the money laundering. During the investigation, the ED has the power to attack properties.

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The CBI FIR

In the previous week, the CBI had conducted raids at two locations in Mumbai and Hyderabad pertaining to this case. According to the CBI, GVK Reddy siphoned funds, using them for personal purposes and to fund the GVK Group companies, causing a loss to the Airports Authority of India (AAI). Mentioning that AAI gave around 200 acres of land around Mumbai Airport to MIAL for development and generating revenue, the CBI alleged that the latter entered into fake contracts with 9 different companies during 2017/18 on the pretext of real estate development. Some of the other allegations in the CBI FIR include misuse of the reserves and surplus funds of MIAL, inflating the expenditure of MIAL by diverting funds, and under-reporting MIAL revenue. 

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PPP model for operation of Mumbai Airport

In April 2006, the AAI entered an ODMA (Operation, management and development agreement) for modernization, upgradation, operation and maintenance of Mumbai airport as a part of the MIAL. The MIAL is a Public-Private Partnership in which the AAI and GVK have a shareholding of 26% and 50.5% respectively. According to the agreement, the government will not only have the first right on the revenue but the MIAL shall share 38.7% of its revenue as annual fee with AAI also. 

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