ED action linked to fraud done by third parties, says Dentsu India

Leading communications company Dentsu India Friday said the recent ED searches against it were related to a suspected fraud done by some "third parties" and this was "proactively" reported by it to the relevant authorities.

The Enforcement Directorate had Thursday said in a press statement that it conducted raids on December 10 at multiple premises in Mumbai, Delhi and Gurugram as part of a probe in the "Suumaya-Dentsu case".

The money laundering case stems from an FIR of the Mumbai police (Worli police station) against Dentsu Communications India Private Limited and Suumaya Industries Ltd, a textile group, and its promoters and some others.

Dentsu India, in response to a PTI query, said they had, in 2021, identified "suspected fraudulent activity conducted by third parties and some of InDeed's former employees against whom criminal complaints have also been filed".

"This activity was limited to the InDeed business only. Three years ago, we proactively reported the matter to the relevant authorities and have been fully co-operating since," it said.

The company said it was in connection with this case that the ED team "visited" Dentsu India office in Mumbai on December 10.

It claimed that the federal agency "did not find or seize any properties from Dentsu's premises".

"We take fraud and wrong-doing very seriously with a zero-tolerance policy towards any such behaviour. We will continue to co-operate with the authorities," it said.

There was no response to a similar query sent to the Suumaya Group.

The Enforcement Directorate Thursday had said it seized Rs 50 lakh in Indian and foreign currency and gold bars worth Rs 3.4 crore following searches in this alleged Rs 137 crore funds embezzlement case.

It did not, however, specify what was seized from where.

The ED said the searched entities are accused of "conspiring" and "embezzling" funds to the tune of Rs 137 crore under the guise of promising future 'Need to Feed' program advantages.

The ED claimed its probe found that "trade financing" was secured from NBFCs (non-banking financial companies) under the pretext of a so-called 'Need to Feed' program of the Haryana government meant to supply agro products.

Accused persons had not received any contract from the Haryana government and there was no such program ever in existence either, the ED claimed.

The accused entities have, in fact, "never" supplied any agro product material for any such program. However, in order to create a fake impression that it is supplying agro products, the accused "connived" and created "fake" records including fake lorry receipts and fake invoices.

Searches led to the disclosure that the listed entities of Suumaya Group entered into transactions worth Rs 5,000 crore, wherein only 10 per cent of the transactions were "genuine".

"These transactions were done in a circular pattern that led to increase in turnover of involved entities including Dentsu India.

"Investors of the listed group entities of Suumaya Group were mis-represented to show such artificially inflated transactions leading to huge spike in share prices," the ED said.

It added that the turnover of Suumaya Industries Ltd "increased" from Rs 210 crore to Rs 6,700 crore in a span of two years (from FY 2019-20 to FY 2021-22) which affected the share price to increase astronomically from Rs 19 per scrip to Rs 736 during this period.

"The circular transactions also led to exponential increase in turnover of entities bidding for government contracts, startups for valuation purposes and others," it claimed.