The Enforcement Directorate (ED) has reportedly unearthed a major corporate social responsibility (CSR) fund racket, implicating at least 40 public sector undertakings (PSUs) and government banks. The alleged scheme, valued at Rs 200 crore, involved routing CSR funds through a network of trusts before being returned to the original donors in cash, minus a commission.
Mastermind Allegedly Impersonated Doctor for Decades
According to preliminary investigations by the ED, the racket was orchestrated by Dharmendra Kumar Chandradev, a Class XII dropout who allegedly posed as a medical doctor for nearly three decades. Chandradev promoted multiple trusts, purportedly for charitable purposes, which were then used as conduits to launder the CSR funds.
The ED stated that the CSR mechanism was exploited to convert accounted corporate funds into unaccounted cash. After receiving donations, the trusts would retain a commission and return the substantial portion of the funds to the corporate 'donors' in cash.
Nationwide Searches and Seizures
On October 1, the central agency conducted extensive searches at eight locations across Maharashtra, West Bengal, Gujarat, and Delhi-NCR in connection with these bogus donation cases. During these operations, the ED seized crucial evidence, including transaction details involving PSU executives and corporate hospitals, along with Rs 21 lakh in unaccounted cash.
Network of Agents and Shell Entities
The investigation further revealed a complex network of agents and intermediaries facilitating the channelisation of CSR funds to Chandradev's trusts. These funds were subsequently routed through various shell entities controlled by market operators. Many of these shell entities have also been flagged in multiple Goods and Services Tax (GST) fraud investigations, indicating a broader web of financial illicit activities.
PSU Executive Kickbacks Alleged
The ED's probe suggests that top executives of several PSUs allegedly received bribes or kickbacks for releasing CSR funds to the implicated trusts. The agency found instances where projects were either partially executed or not completed in proportion to the funds received. Vendor bills were reportedly inflated, with excess funds diverted through bogus or shell entities, further facilitating the illicit conversion of funds.
The ongoing investigation continues to uncover the depth of this sophisticated financial fraud, highlighting the misuse of corporate social responsibility provisions for money laundering and illicit gains.