A multi-state cooperative society in Maharashtra has come under the scanner of multiple investigating and supervisory agencies such as the CBI, Enforcement Directorate and the Union Ministry of Agriculture and Farmers' Welfare after a year-long probe by the Income Tax department that began in May 2017 alleged large-scale "hawala and money laundering activities" in the accounts held with the cooperative society.
Ahmednagar-headquartered Renukamata Multistate Co-op Urban Credit Society Ltd, according to the tax agency, has routed suspicious transactions of over Rs 11,000 crore in the last five years through banks, sources told The Indian Express. The society, according to its website, recorded a turnover of Rs 259.57 crore for the year ending March 31, 2018. It was set up in 2004 and has 47 branches across Maharashtra, Gujarat, Rajasthan and Karnataka. It comes under the regulatory purview of the Multi-State Cooperative Societies Act.
Several phone calls and emails to Prashant Bhalerao, Chairman, Renukamata Multistate Co-op Urban Credit Society, did not elicit a response.
On Friday, signalling the unravelling of the society's functioning over the last several years, the Enforcement Directorate arrested a former Renukamata employee following cues provided by the tax department. It arrested Machhindra Khade, a former branch manager of Renukamata in Nagpur, under the Prevention of Money Laundering Act (PMLA), for allegedly routing about Rs 200 crore illegally through the account holders of the society to shell companies. These shell companies were involved in a Rs 2,000-crore import fraud allegedly perpetrated by Yogeshwar Diamonds Pvt Ltd. Sources said that Renukamata has violated the norms under the Multi-State Cooperative Societies Act.
Based on the comprehensive findings of the I-T probe, the Ministry of Agriculture and Farmers Welfare had last year ordered a forensic audit of Renukamata Multistate Co-op Urban Credit Society Ltd. The audit is likely to look into the transactions carried out by Renukamata in the last ten years, said sources.
The tax agency has alleged that in a single financial year, Renukamata has made real-time gross settlement (RTGS) payments of about Rs 418 crore from its bank account to six shell companies that had "no real business". These firms include Seabird Enterprises, Iconic Enterprises, Azure Enterprises and Fine Touch Impex. None of these companies have ever filed income tax returns and they also do not exist at their registered address, according to the I-T investigation. The tax agency has also claimed that in financial year 2015-16, at least 14 closed bank accounts in a domestic bank have received Rs 175 crore from a few members of Renukamata.
Interestingly, the alleged shell firms - Seabird Enterprises, Iconic Enterprises, Azure Enterprises and Fine Touch Impex - are also being probed by the CBI for allegedly using six banks to illegally transfer Rs 2,252 crore abroad between August 2015 and February 2016 through fraudulent imports. The CBI has alleged that these firms forged bills of entry of imports to Punjab National Bank, Canara Bank, State Bank of Hyderabad, Corporation Bank, Central Bank of India and Axis Bank and remitted money abroad.
The tax investigation on Renukamata detailing the modus operandi alleges that cash deposits were made in the same or different branches of the society in a particular account. The society then aggregated all the deposits and allegedly put them in its own bank account as "funds received from customers". This money was then almost immediately withdrawn by the account holders by submitting withdrawal slips to the society or through RTGS payments by the society to "dummy/shell companies" which effectively gave "them the appearance of being routed through the banking channels," said the I-T report.
The tax probe has found that within a span of one and a half months Renukamata allegedly routed cash deposits of Rs 277 crore in fiscal 2016 through two accounts belonging to members of the society who had "meagre means".
The tax probe has also alleged that a closed account of Mohammed Gaus Hamid Qureshi, an account holder of Renukamata, was used to route cash deposits of Rs 106 crore.
In another instance, the I-T department has claimed that Renukamata accepted cash deposit of Rs 31 crore through three accounts opened with the co-operative belonging to Lawoo Bapu Raut, a vegetable vendor. The vegetable vendor has told the tax department that he got a small commission for the deposits made in his account with Renukamata, claimed the I-T report.
The tax probe has alleged that in one case, cash deposits of Rs 194 crore were made through the account of Farooque Akbar Ali Mistry, an account holder with Renukamata. Mistry has told the tax department that he got a commission of Rs 2,500 for lending his account for the transaction, said the tax report.
The tax authority has also alleged that a trader, Abdul Aziz Sopariwala Md. Saquib, used his account with Renukamata to accept and transfer cash deposits of Rs 33 crore without disclosing the transaction to the I-T department.
While a large number of account holders of Renukamata have accepted the unaccounted transactions, some of them said they were unaware of the activity in their accounts. The tax department has recorded the statements of at least 70 account holders of Renukamata so far under section 131 of the Income-Tax Act.
"Most of the assessees admitted that the said account is their undisclosed account and was used for unaccounted transactions, such as sales on which a percentage of profit/commission was their undisclosed income. Some assessees admitted that the said account was opened by them for a particular some of money (lured by hawala operators) but the account was never operated by them," said the I-T report.
The income tax department has also allegedly detected "suspicious" cash deposits of at least Rs 2,300 crore in a few accounts held by inpiduals at Renukamata Multistate Co-op Urban Credit Society over a few years.
Last year, the Ministry of Agriculture and Farmers' Welfare had asked all multi-state cooperative societies to submit details of their turnover for fiscal 2017 as the government was considering bringing such societies under the definition of reporting entities under the Prevention of Money Laundering Act, 2002. There were 1,435 societies as on October 15, 2018, in the country and about 500 of them are credit societies.