ED raids German company's Indian subsidiary in case of alleged fraud fraud involving Rs 130 cr

New Delhi: The Enforcement Directorate on Saturday said it has frozen bank deposits, mutual funds and other financial investments worth more than Rs 9 crore as part of a money laundering probe against some former employees of a Pune-based subsidiary of a German firm who allegedly diverted company funds to the tune of crores of rupees.

Searches were undertaken at six locations in Pune, Maharashtra and Delhi-NCR on September 4, the central agency said in a statement.

The premises of the former employees and some vendors who worked “hand in gloves” with them were raided, according to the ED.

The money laundering case stems from a Pune Police (Chakan police station) FIR based on a complaint made by the MD of HUF India Pvt Ltd., a subsidiary of German-based company HUF Halswerk & Furst GMBH & Co. KG, that is engaged in the production of electronic remote-control systems for four-wheeled vehicles.

The company had an annual turnover ranging from Rs 100 crore to Rs 300 crore.

It was alleged in the complaint that between the years 2010-2020, ex-employees of HUF India Pvt. Ltd. collectively “diverted” company funds to the tune of Rs 139 crore for their personal financial gain by withholding information from the parent company in Germany by “manipulating” and “misusing” purchase orders, creating false invoices, using HUF fake stamps to generate Goods Receipts Notes (GRNs).

The complaint also said payments were made for these “sham or bogus” invoices.

The ED claimed an audit of the company was conducted that found “financial irregularities” in HUF India Pvt. Ltd., particularly related to the purchase of raw material recorded in the company’s SAP system in the name of fictitious entities.

It said bank funds, fixed deposits, demat account holdings and mutual funds of Rs 9.62 crore were frozen and “incriminating” documents including details of property documents purchased by the accused persons and those related to misappropriation of funds within the company were recovered during the searches.