GVK Group of Companies' Chairman Venkata Krishna Reddy Gunupati and his son, Managing Director of Mumbai International Airport, G V Sanjay Reddy have landed in trouble with the CBI registering a case against them for causing "huge unquantified loss" to the Airports Authority of India (AAI) in the running of the airport.
The Reddys, along with 11 companies, have been named in the FIRs registered on June 27 for allegedly siphoning off Rs 310 crore by showing the execution of bogus work contracts to nine companies in 2017-18 and misusing reserve funds of MIAL to the tune of Rs 395 crore to finance GVK group companies.
They were also accused of causing "huge unquantified loss" to the Airports Authority of India (AAI) by inflating MIAL expenditure and under-reporting of revenue earnings by entering into related party contracts and meeting personal expenses through MIAL funds.
So far, according to the FIR, the CBI has quantified the loss at Rs 705 crore.
The GVK Airports Holdings Ltd, promoted by the GVK Group, had entered into a joint venture with AAI on 4 April, 2006 for modernisation, upkeep, operation and maintenance of Mumbai airport under Public-Private Partnership (PPP) mode.
According to the FIR, around 200 acres of undeveloped land around the airport was given to MIAL for development and generating revenue. The MIAL, in which GVK Group has 50.5% stake, is accused of entering into "fake/bogus" contracts during 2017-18 with nine companies.
"MIAL transferred the funds to them but these contracts have never been executed on ground and the transactions were only on papers. Using this modus operandi, Rs 310 crore have been fraudulently siphoned off," the FIR said adding the nine companies availed "fake Input Tax Credit" and caused further revenue loss to the government.
It is also claimed that the MIAL had entered into "many more such fake/bogus" contracts with "non-existing/non-functional entities and have embezzled funds".
Another accusation is that the Reddys used the surplus funds of MIAL to the tune of Rs 395 crore to finance their other companies. They are accused of forging board meeting resolutions of MIAL authorising to keep the reserve funds of MIAL as FDRs with PSU banks in Hyderabad though MIAL is a Mumbai-based company.
"GVK Group raised loans/OD facilities against these FDRs and used these funds for the benefit" of their Hyderabad-based companies at the expense of MIAL, the FIR said.
The Reddys are also accused of inflating the expenditure of MIAL. For this, the FIR said, the staff of GVK Group's head office in Hyderabad and employees in their group companies were shifted to the payrolls of MIAL.
"The employees who were not at all connected to the operation of MIAL were paid for all these years," it said.
The GVK Group promoters are also accused of giving premium retail areas of the airport to companies owned by their family members, relatives and employees at "exorbitantly low rates" reducing the revenue of MIAL.
They also "misused" the funds of MIAL by entering into agreements with a company owned by their family to book train and air tickets and hotel bookings for GVK Group employees who are not connected with the airport.