ED Attaches Assets Of Educomp Group Company In Money Laundering Case

Assets worth Rs 90.31 crore of a Gurugram-based Educomp Group company have been attached under the anti-money laundering law in connection with an alleged bank loan fraud case, the Enforcement Directorate (ED) said on Monday.

A provisional order for attachment of the properties has been issued under the Prevention of Money Laundering Act (PMLA) against Educomp Professional Education Ltd, a group company of the Educomp Group, it said in a statement.

"Edu Smart Services Pvt. Ltd. diverted bank loan funds to the tune of Rs 90.31 crore and through a web of transactions created assets at Ranga Reddy district in Telangana in the name of sister concern of Educomp Professional Education Ltd," the ED said.

"This amount of Rs 90.31 crore, in the form of parcels of land and rent, is proceeds of crime and was accordingly attached as per provisions of the PMLA," it said.

The total "default" in loan repayment causing wrongful loss to the lending banks is to the tune of Rs 1,955.36 crore in this case.

The ED's case of money laundering against the group stems from an FIR filed by the Central Bureau of Investigation (CBI) against the accused company and its promoters.

The group, promoted by IIM Ahmedabad passout Shantanu Prakash, is undergoing corporate insolvency resolution process.

The CBI had booked Educomp Solutions, its subsidiary and directors for allegedly defrauding an SBI-led consortium of 13 banks to the tune of Rs 1,955 crore in February 2020.

The agency had booked Educomp Solutions Ltd, its managing director Shantanu Prakash, guarantor Jagdish Prakash, its subsidiary Edu Smart Services Pvt Ltd and directors Vijay Kumar Choudhary and Vinod Kumar Dandona for criminal conspiracy, cheating, forgery and under provisions of the Prevention of Corruption Act.

After filing the FIR, the agency had also carried out searches at eight locations in Delhi, Dehradun and Gurugram on the premises of Educomp Solutions, Edu Smart and its directors.

The banks have alleged that Educomp Solutions (ESL), incorporated in 1994, was in the business of creating digital educational content for schools and vocational courses under the brand names "Smartclass" and "Edureach" respectively, CBI officials had said.

It used to enter tripartite agreements with its own subsidiary, Edu Smart Services Pvt Limited (ESPL), and schools for providing the content.

ESL used to sell hardware and digital content under its "Smartclass" business to ESPL, which used to sell it to schools with realisation of sales spread over a contract period of five years on quarterly basis, the officials had said.

It is alleged that ESPL had sought term loans from consortium members by keeping contracted future cash flows from schools as security, which was sanctioned.

The loans raised by ESPL were required to be passed on to its creditors, which is ESL, the CBI alleged.

Later, ESL discontinued its business of selling "Smartclass" through ESPL and decided to directly sell to schools, the officials had said.

The banks restructured ESPL's debt, closing its term loan accounts and transferring liabilities to ESL, they had said.

Fresh term loans were disbursed to ESL by the banks, with future receivables of ESPL also transferred to it, they had said.

Due to non-fulfilment of the terms and conditions of the loans, ESL loan accounts became non-performing assets (NPA) in 2016.

It has also been alleged that ESL and ESPL, through their directors, forged the tripartite agreements with schools and induced the banks for disbursement of term loans by including non-implemented, cancelled or pre-closed contracts in the list of executed contracts, the officials had said.

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