ED awaits Indian Bank scam accused extradition

By T.S. Shankar

CHENNAI, JULY 10. With the CBI arresting Mr. M. Varadarajalu - an NRI who was wanted in connection with a major money-laundering case involving Indian Bank - in Paris, officials of the South Zonal Unit of the Enforcement Directorate (ED) have got a shot in the arm as they are preparing to seek the assistance of the CBI to initiate further probe into the two major FERA violation cases.

Highly-placed sources told The Hindu here today that they are waiting for the extradition of the prime accused, Mr. Varadarajalu, to be brought to Chennai, where as the Chairman of the MVR Group of Companies, he was allegedly involved in two major FERA violation cases of the eight Chennai-based companies running to the tune of over Rs. 369.35 crores.

``We are waiting to record independent statements from Mr. Varadarajalu to get at the complete facts of the money- laundering cases even though the Managing Director of the MVR Group of Companies, Mr. S.P. Vairavan, and the other Board of Directors, had stated that they had only executed the instructions of Mr. Varadarajalu,'' the sources said adding that for the South Zonal Unit, the MVR Group of Companies cases were a prize catch.

Giving details of the FERA violation, sources explained that it was a case of ``intentional and deliberate non- realisation of export sale proceeds of cashew kernels to the tune of Rs. 209.13 crores involving MVR Group of Companies''. The companies involved are: MVR Industries Limited (Rs. 63.29 crores), Maxwell Exim Limited (Rs. 113.38 crores), Sathyam Foods Limited (Rs. 17.51 crores) and Enkay Foods Limited (Rs. 14.97 crores) which contravened the provisions of Sections 18 (2) and 18 (3) read with Section 68 (1) of the FERA, 1973. In addition, there has been a major case of import over-invoicing of raw cashew nuts to the tune of Rs. 160.22 crores in contravention of the provisions of Sections 8 (3) and 8 (4) of the FERA, 1973, which was also detected.

These cases were detected on the basis of specific intelligence gathered by the ED that Mr. Varadarajalu alias M.V. Raja had master-minded laundering of precious forex funds of nationalised banks by resorting to import over-invoicing of raw nuts imported by the MVR Group of Companies of which he is the Chairman/Founder/Principal Advisor.

Investigations revealed that imports of raw nuts were arranged through M/s Mountamount Singapore Private Limited and its group of companies in Singapore, which functioned under the control of Mr. Varadarajalu. Even though the raw nuts procured at lower rates from sellers at Nigeria, Guinea Bissau, Ivory Coast, Vietnam, were directly shipped to India, the MMT Group at Singapore had invoiced them at higher rates which were willingly accepted by their associates - the MVR Group.

This has resulted in laundering of funds as Indian Bank and its consortium banks had opened LCs and facilitated the outflow of foreign exchange. Further, the kernels processed out of raw nuts were shipped to ultimate buyers to the U.S., Australia and the U.K. by the MVR Group.

ED probe has also revealed that Mr. Varadarajalu had acquired vast cashew plantation estates in Nigeria and Australia.

The sources said Mr. Varadarajalu, a native of Thiruvarur in Tamil Nadu, had in ``nexus'' with the former Indian Bank Chairman, Mr. M. Gopalakrishnan, availed himself of loans and not repaid them.

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