Employees of JP Morgan India Ltd, who were on the board of various Amrapali real estate group companies, "laundered" deposits worth Rs 187 crore of home buyers and "diverted" them to the multi-national financial advisory firm's entities based in Mauritius and Singapore by undertaking sham transactions and using shell companies, the Enforcement Directorate has found in its probe.
The central probe agency submitted to the Supreme Court these findings of its investigation as part of a reply-affidavit after it attached Rs 187,34,92,519 in bank deposit of JP Morgan India Pvt Ltd at a bank branch in Mumbai on May 26 under the Prevention of Money Laundering Act (PMLA).
The company, during the last hearing of the case in the Supreme Court on May 27, had denied any wrongdoing and said that this attachment of properties by the ED was blatantly illegal as it was not part of any kind of financial dealing with the Amrapali Group.
The SC had asked the central agency to file a reply on this grievance raised by the company.
The ED, through Additional Solicitor General Sanjay Jain, filed the reply in which it described the modus operandi of the company to allegedly launder the hard-earned money of home buyers who wanted to purchase an abode in Amrapali real estate projects.
The apex court, which is monitoring this case, had in December last year directed the ED and its Lucknow zone Joint Director Rajeshwar Singh, who was present in the court, to take action against JP Morgan under the anti-money laundering law and the Foreign Exchange Management Act (FEMA).
The top court had first cracked the whip in July last year on errant builders for breaching the trust of home buyers and ordered cancellation of Amrapali Group's registration under the real estate law RERA and ousted it from its prime properties in the national capital region by nixing the land leases.
The ED probe in the case found the role of "shell companies" and "dummy directors" in perpetration of the alleged money laundering crime.
"It is revealed in the PMLA investigations that the employees of JP Morgan India Ltd on board of Ms Amrapali Zodiac Developers P Ltd and Ms Amrapali Silicon City P Ltd were not only in complete control of the material decision of the respective companies and securing interests of the funds but they also indulged prima facie in money laundering to divert the home buyers' funds to the tune of Rs 187 crore to JP Morgan India Property Mauritius Company-II in Mauritius and Ms JP Morgan IPF-I Singapore 2 PTE Ltd in Singapore," the agency said in its affidavit that was accessed by PTI.
The employees have been identified as Gunjan Bahl, Hrushikesh Kar and Chanakya Chakravarty.
The agency said the Mauritian company "was an active participant in the conspiracy from the very outset" and that JP Morgan India "played a key role in the remittance of diverted funds of the home buyers to Mauritius and Singapore."
These employees of JP Morgan India P Ltd, it said, serving on the board of Directors of Amrapali Zodiac Developers P Ltd "got arranged the cash flow in the company through funds arranged from other companies of Amrapali group, diversion of the funds of the home buyers, staged valuation of shares, creation of shell companies with dummy directors and sham transactions to finally get accrued about Rs 140 crore to JP Morgan India Property Mauritius Company-II."
The agency claimed that the employees of JP Morgan India while serving on the board of Amrapali Silicon City "got the funds of the home buyers diverted for payment on interest of CCDs (completely convertible debentures) to IPF II-Singapore 1 PTE Ltd to the tune of over Rs 47.31 crore during 2012-15."
This, it said, was despite the fact that during the same period, Amrapali Silicon City Developers P Ltd was "defaulting on interest payments to banks, tax liabilities and payments to NOIDA authorities."
It identified three shell firms-- Mannat Buildcraft Pvt Ltd, Neelkanth Buildcraft Pvt Ltd and Rudraksh Infracity Pvt Ltd-- and said they were sent the "diverted" funds obtained as deposits from Amrapali home buyers and were kept in the bank account of Amrapali Zodiac Developers Pvt Ltd.
These were "not genuine transactions", it said.
The agency said the latter two firms were formed in 2013 but "there were no other transactions observed in their bank accounts."
"In their statements recorded under the PMLA, it is revealed that the directors of these companies were neither aware about the activities of these companies and nor aware about the share purchase transactions," the ED said underlining that the directors of Neelkanth and Rudrakash named companies were dummy.
The agency also said the funds diverted to the three firms "were utilised" for share purchase of Amrapali Zodiac Developers, held by JP Morgan India Property Funds Mauritius Company-II.
The agency charged in its application that JP Morgan was "not presenting" the full facts of these transactions to escape legal consequences. "The employees of JP Morgan India P Ltd, acting on the board of Amrapali Zodiac Developers, exercising complete control in the board of the company indulged in the illegal practice of routing and layering of money through shell companies to accrue benefit to JP Morgan India Company-II to the tune of Rs 140 crore."
"No such transactions could be carried out without the participation of the investor directors, or to say the employees of JP Morgan India P Ltd," it said. It said JP Morgan India's role was just not limited to providing sub-advisory services to the Amrapali group firms but it "actively participated' in decision making and transfer of funds from Amrapali Zodiac Developers and Amrapali Silicon City Developers.
The agency underlined the culpability of the global financial services consultant firm saying its probe found that JP Morgan Asset Management Holdings Inc, parent company of JP Morgan Investment Management Inc, transferred to Apollo Asia Real Estate Management the advisory and management services of the funds of JP Morgan India Property Mauritius Company-II and IPF-II Singapore Pte-1 Ltd after police investigations were launched against various firms of the Amrapali group.