ED conducts raids in Dentsu-Suumaya money laundering case

New Delhi: The Enforcement Directorate said it seized Rs 50 lakh in Indian and foreign currency and gold bars worth Rs 3.4 crore following searches against communications company Dentsu India and textile firm Suumaya Group in a Rs 137 crore alleged funds embezzlement case, according to a Newsdrum report. 

The federal probe agency said in a statement that its Mumbai office launched raids on December 10 on 19 locations in Mumbai, Delhi, and Gurugram as part of an ongoing probe into the "Suumaya-Dentsu case."

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

"They are accused of conspiring together and embezzling the funds to the tune of Rs 137 crore under the guise of promising future 'Need to Feed' program advantages," the agency alleged.

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

The 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% of the transactions were "genuine".

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

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

It added that the turnover of Suumaya Industries "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 caused the share price to increase astronomically from Rs 19 per scrip to Rs 736 during this period.

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

The agency said it seized Rs 46 lakh in Indian currency, about Rs 4 lakh of foreign currency in cash, gold bars worth Rs 3.4 crore and "incriminating" documents related to immovable property transactions and some digital devices. 

In 2022, the Mumbai Police Economic Offences Wing arrested Ushik Gala, a director of Suumaya Industries, for allegedly defrauding another company of Rs 117 crore under the pretext of promising high returns. The charges included forgery, cheating, and criminal breach of trust. The complaint, filed by Vinaykumar Agarwal, alleged collusion between Suumaya Industries, Dentsu Communications, and Veda Multicorp LLP, claiming these entities engaged in fraudulent schemes involving false invoicing and misrepresentation to lure investors.

Suumaya Industries has a presence in textiles, retail, agricultural commodities, medical textiles, and B2B trading. The company manufactures apparel and PPE kits, trades in fabrics, and handles agricultural products like rice, wheat, and pulses. It also operates in the medical textile industry and supplies groceries and staples across the country. Founded in 1985 by Mahesh Devchand Gala, Suumaya began as a small shop selling unstitched women's suits in Santacruz, Mumbai.