AML Watchdog of India, Enforcement Directorate (ED) has attached properties worth Rs 1317 Crore belonging to IREO Pvt. Ltd. its associated entities, and key managerial persons.
IREO is the company promoted by Lalit Goyal. IREO Stands for India Real Estate Opportunities Fund. ED has provisionally attached properties worth Rs. 1317.30 Crore under the Prevention of Money-Laundering Act (PMLA), 2002 belonging to M/s. IREO Pvt. Ltd; The attached properties include land, commercial spaces, plots, residential houses, and bank accounts.
History of IREO
Anurag Bhargava, a successful private equity professional who managed the capital of Michael Dell, branched out with the intention of setting up his own firm to cash out on the boom in the real estate sector in India. He along with Lalit Goyal floated two firms in Mauritius and India. Bhargava was an influential professional and due to his clout, IREO raised over $1.6 billion from 400 investors across the world. Citadel LLC in Chicago, Temasek Holdings Pte. in Singapore, the Pritzker Family Office, Donald Trump Jr. were some of the investors.
Political Nexus of IREO
In certain projects, IREO partnered with the Trump Organisation, which belonged to the Ex-US President Donald Trump. Though the current investigations revolve around only identified properties in the Northern Part of India.
Additionally, Lalit Goyal who is the Chairman of IREO is also a relative of BJP politician Sudhansu Mittal. Lalit Goyal’s sister is married to BJP leader Sudhanshu Mittal. Earlier in the year 2010, Sudhanshu Mittal, who is considered to be close aide of Rajnath Singh and Pramod Mahajan was investigated for irregularities in the Commonwealth Games.
ED initiated an investigation under the provisions of PMLA, 2002 on the basis of 30 FIRs under sections 120-B, 420, 467, and 471 of the Indian Penal Code, 1860 registered at various Police Stations across Gurugram, Panchkula, Ludhiana, Delhi, etc. against real estate company M/s. IREO Pvt. Ltd., associated entities, its directors, key managerial persons, and others.
An investigation by AML Watchdog of India revealed that IREO duped innocent buyers by promising them to deliver flats/ plots/ commercial spaces etc., however, they neither delivered the projects nor returned their money.
Modus Operandi
The modus operandi adopted by the group includes routing of funds to India from various entities based in tax havens like the British Virgin Islands and Mauritius; recording of fictitious expenses in the books of account; writing off projects in progress; interest-free loans and advances to sister concerns and ’round-tripping’ of funds through shell companies.
Earlier, ICIJ published the ‘Pandora Papers’ based on the 11.9 million leaked files from 14 global corporate services firms which set up about 29,000 shell companies in multiple countries. Lalit Goyal and his firm’s names appeared in the list of companies outside India. These companies were probably the vehicles of money laundering.
Lalit Goyal and his company IREO have been facing a probe since 2010 in a case of violation of the Foreign Exchange Management Act (FEMA)
The investigation further revealed that the directors of the Company in connivance with others siphoned off money collected from buyers and did not use it for the intended purpose rather sending money outside India in the form of buy-back of shares, redemptions, FCDs, etc., and giving loans and advances to associated entities/persons, giving excessive incentives and advances to key managerial persons to fudge the books of the account who in turn invested it in purchasing immovable properties and shares of various companies within and outside the Country.
The ED arrested Goyal on November 16, 2021. A few days earlier, on November 11, Goyal was stopped by immigration authorities on the basis of a Lookout Circular (LOC) issued by the agency, while he was trying to board a flight to the United States from Delhi’s Indira Gandhi International (IGI) Airport. He has since been in judicial custody.
Who filed the complaint?
The whole investigation started in the IREO case when the earlier CEO of the company, Ramesh Sanka made whistleblowing allegations against the company’s Managing Director Lalit Goyal. In 2019 when Sanka’s writ petition with the Supreme Court was disposed of with instructions to look into the matter, a lot of customers who were home buyers had filed complaints. On the basis of that, the ED took cognizance of elements of fraud and money laundering and issued an ECIR against the accused.
Names of Companies in IREO Group
Ramesh Sanka, the former CEO identified 10 companies that were used to hold the land banks of the Ireo Group and were involved in the whole scheme of cheating and could be termed as conduits of money laundering. Though there is no action against them by the Enforcement Directorate as yet.
- High Star Builders P Ltd.
- Panoply Propbuild P Ltd
- Regal Greenlands P Ltd
- Sang Promoters P Ltd
- Hardcore Realtors P Ltd
- Auspicious Infrastructures P ltd
- Buzz Hotels P Ltd
- Adson Software P Ltd
- BTVS Buildwell P Ltd
- Bulls Realtors P Ltd
