Brightcom Group’s Rs. 868.30 Cr asset impairment case: ED raids CEO Suresh Reddy, others in Hyderabad

Hyderabad: Enforcement Directorate (ED) raided the offices and residences of Brightcom Group promoters and auditors in Hyderabad.

The searches were conducted at 5 locations in Hyderabad on August 23.

The premises raided include Brightcom Group Ltd., residences of company’s CEO M Suresh Reddy and CFO SLN Raju, the residence and office of company’s auditor P. Murali Mohana Rao.

The searches were conducted under the provisions of the Foreign Exchange Management Act (FEMA), 1999

ED initiated a FEMA investigation based on an investigation being conducted by the Securities and Exchange Board of India (SEBI) regarding the impairment of assets worth Rs. 868.30 Crore by Brightcom Group through its subsidiaries abroad.

ED inquiry revealed several violations of the provisions of FEMA, 1999 by Brightcom Group Limited. It was revealed that Brightcom itself financed the preferential issues by round-tripping funds through subsidiaries and conduit entities;

ED said Brightcom falsely claimed to have received full payment for preferential shares/warrants by providing ‘forged and fabricated bank statements’ to SEBI. It was further revealed that more than three hundred crore rupees advanced as loans to subsidiaries were partly siphoned off or remained unaccounted for.

The statutory auditors, P Murali& Co. and PCN & Associates (a related entity of P Murali& Co.), apart from failing to report outright fraud colluded with the management/promoters of the company.

During search operations of ED, various incriminating documents and digital devices were recovered and seized. These include unaccounted cash of Rs. 3.30 crore and gold jewelry & bullion worth Rs. 9.30 Crore from the residence of auditor, P. Murali Mohana Rao (P. Murali & Co.). The residential premises of M Suresh Reddy were sealed.

Further investigation is under progress.