Jagan govt reopens Rs 2600 Cr scam; raids 18 locations of Eenadu group

Margadarsi Chit Fund: Jagan govt reopens Rs 2600 Cr scam;  Eenadu attacks in 18 places of the group

Amaravati: A week before the hearing in the Margadarsi case, former Congress MLA Undavalli Arun Kumar, who has filed a petition in the Andhra Pradesh High Court, has raised questions about the actual money collected from depositors and other irregularities in the chit-fund company.

The court will judge the case on December 2. Media baron Cherukuri Ramoji Rao of Eenadu group owns the chit fund company. A week ago, the Stamps and Registration department of Andhra Pradesh conducted searches at various offices of the company.

What is Margarsa fraud?

In 2006, former Congress MLA Vundavalli Arun Kumar filed a petition in the high court alleging a huge fraud. He presented the balance sheet of Margadarsi Chit Funds for the year 2021-22 and said that Ramoji Rao had signed the document as the company’s chairman.

Hyderabad-based Margadarsi Financiers, the group dealing with Margadarsi Chit Funds, alleged that the collection of deposits violated the Reserve Bank of India Act. Margadarsi Financiers is a Hindu Undivided Family (HUF) company promoted by Ramoji Rao. As per RBI rules, it cannot collect deposits from the public. However, the company mobilized 2.6 billion from people in the form of deposits. In 2014, the high court dismissed the case after Ramoji Rao said he was not a member of the HUF.

The case was reopened in 2020:

In 2020, Undavalli Arun Kumar challenged the high court verdict in the Supreme Court. On 20 August 2022, the Andhra Pradesh government pursued the case by filing a special leave petition in the Supreme Court. The Supreme Court also issued notices to Margadarsi Financiers and allowed the Reserve Bank of India (RBI) and others to take up the case.

It is to be noted that in August 2022, Ramoji Rao had a meeting with Union Minister Amit Shah, which sparked a thought that the media baron might propose an alliance between the TDP and the BJP ahead of the 2024 Assembly elections in Andhra Pradesh.

Searches made

After allegations were made by Undavalli Arun Kumar, the Stamps and Registration Department conducted searches at 18 locations and offices of the Margadarsi chit fund on November 15. During the searches, officials seized records and materials pertaining to proceedings under the Chit Funds Act 1982.

“Evidence of misappropriation of funds, non-payment of GST and failure to provide security under Section 31 (of the Chit Funds Act) was collected. In view of the above, all the Representative Registrars of Chits in the state are directed to take necessary action, inter alia. Penalty for the above irregularities -action, and submitting compliance,” the department said in a statement.

The former MP requests a judicial investigation.

Former lawmaker Undavalli Arun Kumar asked a retired Supreme Court judge for an inquiry into financial irregularities in the Margadarsi Chit Fund. Addressing the media, the former MLA said, “In 2006, Ramoji Rao stated that Margadarsi had stopped collecting deposits. He filed an affidavit to return the deposits in the High Court and the Supreme Court. However, the deposits were still being collected. In the name of Margadarsi chit fund receipts.”

The former MP alleged that the financiers of Margadarsi had a bank balance of Rs 1,688 crore till August 20, 2012, but Ramoji Rao did not clarify where the company got such a huge amount of money.

Arun Kumar demanded that the state government should allow the documents seized from the Margadarsi chit funds to prove violation of the RBI Act. He also sent a letter to the Inspector General of Stamps and Registration Department seeking permission to examine the documents under the RTI Act.

What do the officials of Margadarsi say?

Margadarsi Chit Fund Private Limited termed the investigation as a “conspiracy attempt” by the government led by YS Jagan Mohan Reddy. Company officials alleged that Margadars had been accused of involvement in a Rs 2,600-crore fraud.

In a statement, the chit-fund company said the authorities had abused the power of their office by trying to create false evidence of violations after failing to find any irregularities. Margarsari said three days of inspections found no evidence of wrongdoing, so they created a document with fictitious violations and errors and continued to pressure managers to sign it.

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