HYDERABAD — The Enforcement Directorate (ED) on Tuesday conducted extensive search operations across six locations in Hyderabad. These raids are part of an ongoing investigation into a substantial bank loan fraud amounting to ₹621 crore. The probe centers on alleged financial misconduct by SEW Infrastructure Limited (SIL), Prasad & Company (Project Works) Private Limited (PSPWPL), and their associated companies and directors. The action follows a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI) in September 2020, which highlighted concerns of criminal conspiracy, cheating and violations related to public funds.
The Highway Project at the Heart of the Scam
At the core of the alleged fraud is a highway construction project in Uttar Pradesh. A special company, SEW LSY Highways Ltd, was formed to carry out this project which was awarded by the Uttar Pradesh State Highway Authority to a group of companies including SIL and PSPWPL. To fund this ambitious endeavor, a large loan of ₹1,700 crore was approved by a group of 14 banks, led by Punjab National Bank. A significant portion, over ₹603 crore, was disbursed for the project. However, despite these funds, the highway project remains unfinished, and the loan has now been officially declared a “non-performing asset,” meaning it is not being repaid, with ₹621 crore still outstanding.
A Web of Subcontracts and Diverted Funds
The ED’s investigation has revealed a sophisticated method used to allegedly divert the loan money. SEW Infrastructure Limited (SIL) reportedly awarded the main construction contract to another company within its own group, SEW Transport Networks Ltd (STNL). This group entity then further subcontracted the work at even lower prices to other firms, including PSPWPL. This chain of subcontracts, with work being passed on at reduced costs, suggests a deliberate plan to move the loan money away from its intended purpose. Furthermore, PSPWPL, which owned a 30% share in the highway project company, is accused of receiving some of these diverted funds and then falsely presenting them as its own required contribution to the project, in direct violation of the loan’s terms.
Unfinished Project, Frozen Assets, Ongoing Probe
As a result of their recent operations, the ED has taken significant steps. They have seized important financial documents and property papers valued at approximately ₹120 crore, which are believed to be held in the names of the companies’ promoters and their family members. In addition, 33 bank accounts belonging to SEW Infrastructure Ltd, SEW Transport Networks Ltd, and their directors and relatives have been frozen. The ongoing investigation aims to meticulously trace the entire flow of money and identify all assets that may have been acquired using these allegedly diverted public funds.