Corruption
ED Seizes Rs 1,000 Crore Assets in Alleged Coal Block Fraud
Chennai: The Enforcement Directorate (ED) has seized assets worth Rs 1,000 crore after conducting searches against Chennai-based RKM Powergen Private Limited (RKMPPL) and its associates. The company is accused of fraudulently acquiring the Fatehpur East Coal Block in Chhattisgarh. The searches, conducted under the Prevention of Money Laundering Act (PMLA), targeted key individuals, including Andal Arumugam and S. Arumugam. The investigation stems from a CBI case that alleged the company obtained the coal block through fraudulent means.
Loan Misuse and Fund Diversion
RKMPPL secured a loan from the Power Finance Corporation (PFC) based on the coal block allocation. However, ED found that Rs 3,800 crore of these funds were transferred to a foreign entity, MIPP, controlled by RKMPPL, for the purchase of overvalued machinery.
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The agency revealed that 26% of RKMPPL’s shares were issued to Malaysia-based Mudajaya Corporation Bhd. and 10.95% to Enerk International Holdings Ltd. at a Rs 240 per share premium, while 63.05% shares were issued at face value. The valuation lacked transparency, and financial assessments were inconsistently applied. Mudajaya Corporation allegedly re-routed PFC-sanctioned funds through its subsidiary, MIIP International, effectively round-tripping project funds. An estimated Rs 1,800 crore was funneled back to RKMPPL under the guise of equity participation.
Assets Frozen and Seized
During the raids, ED froze fixed deposit receipts (FDRs) and mutual funds worth Rs 912 crore and seized key documents related to immovable properties valued at Rs 1,000 crore. The investigation is ongoing, with authorities closely examining fund flows and the company’s financial dealings.
