Luxury cars, watches and fake bank accounts: Inside the ₹107-crore Panchkula fraud

A former Kotak Mahindra Bank executive allegedly diverted more than ₹107 crore belonging to the Municipal Corporation of Panchkula into unauthorized bank accounts before using the proceeds to acquire luxury cars, watches and real estate, a probe by Enforcement Directorate (ED) has revealed.

The federal anti-money laundering agency said on 5 August that it had attached assets worth ₹131.13 crore, including bank balances of ₹12.85 crore and properties valued at ₹118.28 crore, as part of its probe into the alleged fraud. According to the ED, the attachment comprises the ₹107 crore allegedly diverted into the fake accounts along with the interest earned on those funds.

According to the ED, Pushpinder Singh, then deputy vice-president at Kotak Mahindra Bank, conspired with Vikas Kaushik, an official of Municipal Corporation (MC) of Panchkula, and Dilip Raghav, a Kotak Mahindra Bank employee, to open two unauthorized bank accounts in the municipal body's name using forged documents and fabricated authorizations.

The agency alleged that funds held in Panchkula MC's legitimate accounts with Kotak Mahindra Bank were transferred into these unauthorized accounts through fake authorization letters.

“Once the funds were received in these two unauthorized bank accounts…the funds were further transferred to persons such as Rajat Dahra, Swati Tomar, Kapil Kumar, Vinod Kumar and Sonia, and to entities such as S.K. Agrotech and S.K. Agrofirm, for further layering of the funds and to disguise the source of the Proceeds of Crime,” the ED said.

The agency further alleged that Singh used the diverted funds to extend unsecured loans to individuals including Sunny Garg, Priyanka Garg, Samar Mohan Ranga and Aryan Singh, and to entities including Sanat Realtors, Central Infradevelopers, Sanat Ventures Enterprises, Savage Rechords, and Sanat Enterprises.

According to the ED, these loans carried cash interest payments of 3% a month, or 36% annually.

Luxury assets, alleged round-tripping

The ED alleged that the proceeds were used to purchase luxury assets, including a Porsche Cayenne, BMW 740LI, Toyota Land Cruiser, Harley-Davidson motorcycles, watches, and real estate.

According to the agency, the vehicles were sold to third parties after the alleged fraud came to light. It also alleged that Singh sold properties in Sector 2, Panchkula, after the fraud was detected, to his sister, Gunita Sethi. The agency said the transaction was funded by Sethi through money received from Chaudhary & Sethi Legal Advisory, a firm owned by Singh's wife, Preeti Thakur.

“This round tripping of funds was done with an intent to disguise the ownership of these properties for the purpose of alienation from attachments under provisions of Prevention of Money Laundering Act (PMLA),” the ED said.

The agency also said its investigation found an abnormal rise in Thakur's income from FY23 and a significant increase in the turnover and profits of her firm from FY24 onwards, which it said coincided with the period during which the alleged fraud took place.

“This firm was used by Pushpinder Singh for the disposal of movable and immovable properties acquired from the proceeds of crime: the illegally acquired funds of MC Panchkula,” the ED said.

The case stems from discrepancies detected in deposits and bank accounts maintained by the Municipal Corporation of Panchkula with Kotak Mahindra Bank, according to a PTI report dated 26 March.

A day later, Kotak Mahindra Bank told stock exchanges that, following instructions from the Municipal Corporation of Panchkula, it was examining the matter.

On 2 May, Anup Kumar Saha, the bank's whole-time director, told analysts that the ED was investigating the case and that the preliminary first information report (FIR) pointed to alleged embezzlement involving officials of the municipal corporation, bank employees and private individuals.

“We are cooperating with the relevant authorities. That's where the position today stands on Panchkula,” Saha had said.