ED raids 12 Ireo group premises in money laundering case

The Enforcement Directorate is conducting searches at 12 locations across Delhi and other parts of north India in connection with its money laundering probe against the Ireo group. Sources said the offices of the CEO and the CFO of the group along with various other premises associated with Ireo in the Delhi-NCR region and Chandigarh are being searched.

“The searches are going on currently. They are based on certain findings of the agency during our investigations,” an ED official said.

The agency had last Tuesday arrested Lalit Goyal, vice chairman and managing director of the Ireo Group, after four days of questioning. Goyal had been arrested in connection with a case of money laundering registered by the agency at its Chandigarh branch on the basis of allegations that Ireo swindled funds of home buyers and its investors.

“The Enforcement Directorate has arrested Lalit Goyal, Managing Director of M/s IREO Group of companies, under the Prevention of Money Laundering Act, 2002… in a case related to cheating and siphoning of funds of Home Buyers/ Investors and Others,” the ED had said in a statement.

It also made a mention of The Indian Express investigations into the ‘Pandora Papers’, which revealed that Goyal moved an estimated $77 million in the form of investments, among others, even as home buyers and investors ran from pillar to post for their money.

“The investigation further reveals that Lalit Goyal is a settler and named beneficiary of a Guernsey-based overseas Trust, which owns and controls entities holding assets outside India. Recent Pandora Papers Leak has also named four entities (which are beneficially owned by Lalit Goyal) having registered address in BVI with assets having a value of more than $77.73 million (Rs 575 crore approximately),” the ED statement had said.

Goyal was produced in a special court in Panchkula on Tuesday and remanded in ED custody for seven days.

Goyal was detained at the IGI Airport on November 11 based on a look out circular against him while he was preparing to board a flight to go abroad.

According to the ED, it initiated money-laundering investigation on the basis of FIRs registered at Panchkula by Haryana Police, Economic Offences Wing, Delhi Police and an FIR registered at Hauz Khas police station in Delhi against M/s IREO Private Limited, M/s IREO Fiveriver Private Limited, Lalit Goyal and others.

“The modus operandi adopted by the group includes routing of funds from various entities based in tax haven countries like British Virgin Islands (BVI), among others, diversion of funds by way of buy back of equity shares, recording of fictitious expenses in the books of accounts, writing off project in progress, loans and advances to sister concerns and round tripping of funds through shell companies. Total funds involved are over Rs 2,600 Crore, part of which is proceeds of crime,” the ED said in a statement.

On November 11, 2019, Haryana police had registered the first FIR relating to the IREO group housing project in Panchkula. The complainant had alleged fraud involving a total amount of 160 crore on the construction company named Ireo Five River, under offences of cheating, criminal breach of trust, dishonesty, misappropriation of funds, forgery for the purpose of cheating, corporate and economic offences, act of threat and criminal conspiracy with a common intention.

The FIR had also stated that the company “Ireo Five river Pvt Ltd neither had license nor land in its name. The Director, Town and Country Planning Department had not given it any approval/permission to develop the colony. The DTCP had not also granted it permission to sell plots/flats et al to buyers and collect money from them.”

According to the FIR, the company is an amalgamation of 10 other construction companies, neither of them based in tricity.

The ED is also probing a Foreign Exchange Management Act (FEMA) case against the company since 2010.

An October 12 report published in The Indian Express had revealed that Goyal had moved $77 million to offshore trusts even as homebuyers and investors had approached authorities and courts against the company for return of their money.

The IREO Group flagship IREO Private Limited is reeling in losses — Rs 500 crore in 2018-19.

According to revelations made in the ‘Pandora Papers’ investigation, the group co-founder Lalit Goyal, whose sister is married to BJP leader Sudhanshu Mittal, had moved assets, investments, and shareholdings worth an estimated $77 million to an offshore trust structure which included four entities registered in the British Virgin Islands much before the group got into trouble. This was revealed in internal documents of Trident Trust, a global corporate services company.

According to these documents, Goyal had provided the address of his Singapore residence and had set up the Oak Veneer Trust in tax haven Guernsey with Standard Chartered Trust (Guernsey) Ltd as a trustee. Goyal is the ‘Settlor’ — one who sets up or authors the trust — of Oak Veneer Trust. He and Standard Chartered Trust (Guernsey) Ltd – by virtue of it being a trustee of Oak Veneer – are the ‘Beneficial Owners’ of the four offshore entities, all of which were acquired either to hold property, shareholdings and investments, or to be an ‘investment vehicle’.

Responding to the October 12 report of The Indian Express on behalf of Goyal, Sasttra Legal, Advocates and Solicitors, said he is a non-resident Indian as per the latest assessment filed with Indian tax authorities. “It is reiterated that all investments made by Mr Lalit Goyal are legitimate and no monies from homebuyers have either been invested or ‘illegally siphoned’ off,” the law firm said.

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