ED Raids IFFCO, Its MD In Alleged Money Laundering Case

ED Raids IFFCO, Its MD In Alleged Money Laundering Case

The Enforcement Directorate (ED) on 15th October 2020 searched the premises of Indian Farmers Fertiliser Cooperative Limited (IFFCO) and its MD US Awasthi. The searches were conducted in connection with a case of money laundering registered by the ED for alleged irregularities in the cooperative’s financial transactions.

IFFCO has been under the scanner of central agencies since 2011, when its then chairman Surinder Jakhar died in mysterious circumstances at a farmhouse, with his body found riddled with bullets and police claiming it to be a case of accidental fire. Jakhar was the son of Congress leader Balram Jakhar.

A reference sent to CBI and ED by the Central Vigilance Commission (CVC) then had alleged irregularities in procurement of raw material for fertiliser from certain foreign countries. Awasthi was then the MD of IFFCO and continues to hold the post.

In 2018, the government had informed Lok Sabha that it had asked CBI to probe IFFCO and Awasthi for various irregularities. The latter was also to be probed for alleged money laundering, the government had said.

IFFCO’s transactions with three companies based in Dubai, Switzerland and Singapore were red-flagged by Deutsche Bank Trust Company Americas (DBTCA) to the US financial watchdog, Financial Crimes Enforcement Network (FinCEN).

In July 2014, an SAR filed by DBTCA flagged 14 transactions of IFFCO involving transfers and remittances worth $18.46 million. The SAR cited “negative information found on the MD and CEO of Indian Farmers Fertiliser Cooperative Limited for potential money laundering”.

On August 7, 2018, government had told Lok Sabha that CBI had been asked to probe complaints — received between 2013 and 2017 — related to the cases of corruption and irregularities against IFFCO officials, including its MD U S Awasthi and his family members.

“Department of Fertilisers has referred various complaints pertaining to corruption and irregularities in IFFCO to CBI for enquiry/reports and the same are awaited,” then Minister of State for Fertilisers Rao Inderjit Singh had said in a written reply to the Lok Sabha.

The cases, which the fertiliser ministry had asked CBI to probe, are related to alleged money laundering by the IFFCO managing director, his sons, relatives and friends associated with the cooperative, Inderjit had said.

They also relate to alleged grabbing of the guest house and posh bungalow by Awasthi in an illegal and unlawful manner, subsidy fraud by opening Kisan International Trading, earning huge illegal commission in imports of raw materials and finished fertilisers thereby creating huge loss to the society, the minister had added.

The minister had further mentioned that the cases to be probed also include alleged “illegal extension of Awasthi’s term of superannuation beyond the age of 65 years, increasing his remuneration and other functional directors, seeking favours from political parties by extending donations in a camouflaged way in violation of Multi State Cooperative Societies Act (MSCS), 2002”.

The cases are also related to alleged defrauding the government by manipulating sales and claiming higher subsidy, illegally inducting kith and kin on suitable posts in IFFCO by Awasthi and misusing resources and facility of the cooperative, he had added.

Besides, the cases also involve alleged gross mismanagement of funds along with siphoning off money and fabricating balance sheet by IFFCO, wrong disclosures in violation of established accounting practices and misleading the stakeholders, especially the banks, by IFFCO.

The complaints also include manipulation of Multi State Cooperative Societies Act, further manipulating bye-laws of society and illegal repatriation of the government equity by IFFCO Board, the minister had said.

Kamal Verma, Senior Executive Director, IFFCO, had said: “We are not aware about any transaction made by IFFCO worth over $18 million during March 2014 to June 2014, which were red-flagged as suspicious in 2014. We confirm that there has not been any instance of financial irregularity, siphoning of money or money laundering.”

In case details of $18 million transaction are provided, relevant information for the same can be made available to substantiate the genuineness of such payments. During the referred period of March 2014 to June 2014, all payments against imports were made through authorized banks like State Bank of India, HSBC, RBS, Kotak Mahindra Bank, etc. against submission of documents…and the bankers release/remit the payments to the overseas suppliers only after effecting due diligence with respect to the authenticity of the transaction and the suppliers. The Board of Directors of IFFCO has approved an elaborate procedure for the purchase of raw materials and finished products. The Commercial Department initiates necessary actions for the procurement of such material. All such proposals are being reviewed and approved by the Executive Committee of the Board of Directors. The Managing Director& CEO is not directly involved in the procurement/purchase of raw materials,” he further said.

Ria Nair
“Creative approach coupled with patience, makes understanding intricate issues simpler.” I am Ms. Ria Nair and my aim is to help you perceive a complex idea in a better way and seek your answer/s. I am currently pursuing my Bachelor’s in Business Administration and Law [B.B.A. LL. B (Hons.)] from Amity University, Mumbai. Understanding laws that govern human relations in all fields, gaining knowledge about aspects that govern the Universe and keeping an open mind are of primary importance to me as a law student and a human being. I hope to learn with every new opportunity and contribute to make others’ lives simpler.