The searches were conducted as part of the investigation conducted by the Securities and Exchange Board of India (Sebi) regarding impairment of assets worth Rs 868 crore by the company through its international subsidiaries.
The inquiry by the ED revealed that Brightcom Group violated provisions of Foreign Exchange Management Act (FEMA).
“It was revealed that Brightcom itself financed the preferential issues by round-tripping funds through subsidiaries and conduit entities; that Brightcom falsely claimed to have received full payment for preferential shares/warrants by providing ‘forged and fabricated bank statements’ to SEBI,” the ED said.
Further, more than Rs 300 crore advanced as loans to subsidiaries were partly siphoned off or remained unaccounted.
The ED also conducted searches at the residence of the company’s statutory auditors P. Murali Mohana Rao and PCN & Associates, which revealed that they colluded with the management/promoters of the company.
During the search operations, various incriminating documents and digital devices were recovered and seized, including unaccounted cash of Rs 3.30 crore and gold jewellery and bullion worth Rs 9.30 crore from the residence of Rao.The ED has sealed the residential premises of Reddy, and said that further investigations are under progress.
Earlier this month, Sebi passed a second interim order against Brightcom Group, restraining Reddy and Raju from holding any directorial positions, and has also barred them from the securities market until further notice.
The restraining order was following an investigation that revealed that the officials were involved in round-tripping of the company’s funds to falsely portray receipt of proceeds through preferential allotment of shares.
The searches by the ED came a day before the board meeting of the company to address the implications of the interim order and the course of action.
Shares of Brightcom Group ended 5% down on the National Stock Exchange on Friday at Rs 20.85.
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