The Enforcement Directorate (ED) on Thursday conducted searches at 11 premises in Kolkata linked to Kohinoor Power as part of a money laundering investigation into an alleged ₹290 crore bank loan fraud. The searches were carried out under the Prevention of Money Laundering Act (PMLA) and covered premises linked to the company’s promoters, Prashant Bothra and Vijay Bothra, as well as other directors and auditors.
The agency has alleged that loans obtained from banks to establish a 66 MW power plant in Jharkhand were diverted to other group entities and for personal use instead of being used for the intended project.
How Was the ₹290 Crore Loan Allegedly Diverted?
According to the ED, Kohinoor Power had secured bank financing for setting up the power project in Jharkhand. The funds were meant to be used for establishing the plant and meeting expenses related to the project.
However, the agency has alleged that a portion of the loan amount was transferred to other group companies, while some of the funds were allegedly used for personal purposes.
The ED is now examining the flow of the loan proceeds, including the bank accounts into which the funds were transferred, the companies involved in the transactions and the stated purpose of these financial movements.
Investigators are also trying to determine whether borrowed funds were moved to entities that had no direct connection with the proposed power project.
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Why Was Only Around ₹7 Crore Recovered?
Kohinoor Power subsequently faced financial difficulties and entered insolvency proceedings before the National Company Law Tribunal.
Liquidation proceedings were later initiated with the aim of recovering dues from the company’s available assets and resources.
However, according to officials, only around ₹7 crore could be recovered during liquidation, significantly lower than the outstanding bank exposure.
The ED is now examining how the company’s financial position deteriorated, what assets were available before insolvency proceedings began and how much of the borrowed money was allegedly diverted away from the power project.
What Is the ED Looking for in the Kolkata Searches?
Thursday’s searches form part of the agency’s investigation into the alleged diversion of loan proceeds and their subsequent laundering.
Officials are examining financial records, bank documents, business records and other material connected with the transactions. The evidence is expected to help investigators reconstruct the movement of funds and identify financial links between various group entities.
The ED has also searched premises linked to the company’s directors and auditors. Investigators are examining whether other individuals associated with Kohinoor Power played any role in the alleged financial irregularities.
Are Promoters, Directors and Auditors Also Under Scrutiny?
The searches covered premises linked to promoters Prashant Bothra and Vijay Bothra, along with other directors and auditors associated with the company.
Investigators are examining transactions through which the loan proceeds were allegedly transferred to other entities and whether those movements had any legitimate connection with the power project.
The role of individuals involved in the company’s financial management, accounting and movement of funds is also expected to be examined as part of the broader money laundering investigation.
What Happens Next in the ₹290 Crore Loan Probe?
The investigation is now focused on determining how much of the ₹290 crore borrowed from banks was actually used for the 66 MW power project, how much was transferred to other group entities and how much was allegedly used for personal purposes.
The agency is also examining why only around ₹7 crore could eventually be recovered during liquidation despite the much larger loan exposure.
The ED will analyse documents and other evidence gathered during the searches before deciding on further action. If investigators establish evidence of deliberate diversion of loan proceeds and attempts to disguise such transactions as legitimate financial dealings, further proceedings under the PMLA could follow against the individuals and entities concerned.
For now, the probe remains centred on the alleged misuse of the ₹290 crore bank loan, the movement of funds between different entities and the circumstances that resulted in only a fraction of the outstanding amount being recovered during liquidation.
