The Enforcement Directorate (ED) carried out multiple searches at the locations of Brightcom Group (BG), a Hyderabad-based digital marketing company, on August 23.
The searches were conducted at the residences of its CEO M. Suresh Reddy, CFO S.L.N. Raju, office and residence of company’s auditor P. Murali Mohana Rao under the provisions of the Foreign Exchange Management Act (FEMA), the ED stated in a release on Saturday.
The ED’s action was based on investigations being conducted by the Securities and Exchange Board of India (SEBI) regarding impairment of assets worth ₹868.30 crore by BG through its subsidiaries abroad.
According to ED inquiry, BG itself financed the preferential issues by round-tripping funds through subsidiaries and conduit entities that Brightcom falsely claimed to have received full payment for preferential shares and warrants by providing ‘forged and fabricated bank statements’ to SEBI.
It was further revealed that more than ₹300 crore advance as loans to subsidiaries were partly siphoned off or remained unaccounted for. The statutory auditors, M/s P Murali & Co. and M/s PCN & Associates (related entity of P Murali & Co.), apart from failing to report outright fraud, colluded with the management and promoters of the company, it stated.
During the searches, the ED seized various documents, digital devices and unaccounted cash of ₹3.30 crore and gold jewellery and bullion worth ₹9.30 crore from the residence of auditor Rao. The residential premises of CEO Reddy was also sealed.