ED to file money laundering case against Reddys?

HYDERABAD: Gali brothers are in for more trouble. While the CBI (Central Bureau of Investigation) is vigorously pursuing the illegal mining case involving the Obulapuram Mining Company (OMC) owned by them, the Enforcement Directorate (ED) is all set to register a case to probe the money laundering angle in the huge wealth amassed by the Gali brothers.Unlike in the case pertaining to alleged illegal assets of Kadapa MP YS Jagan Mohan Reddy, where the ED registered a case but is yet to initiate attachment of properties, it is likely that in the case involving Gali Janardhan Reddy and his brother-in-law BV Srinivas Reddy, attachment of properties will begin immediately after registering of a case.Top sources told Express that ED officials, who are working in tandem with the CBI, are understood to have stumbled upon certain vital leads indicating that there is a money laundering angle to the whole affair surrounding the OMC. It is learnt that the ED officials based in Hyderabad had sent a preliminary report to their bosses in Delhi and the same had been forwarded to the top brass in the Ministry of Finance.“Not yet,” was how an ED official reacted when Express sought to know when a case is likely to be registered against Gali Janardhan Reddy. Informed sources said the ED is gearing up to attach the properties of Gali brothers and is in the process of gathering their assets details. Most of the information is already available with the CBI which has shared it with ED.Once the ED gets the nod from the higher-ups to register a case, the Gali brothers will be booked under section 3 of the PMLA (Prevention of Money Laundering Act) which says whoever directly or indirectly attemps, assists or knowingly is involved in any activity connected with proceeds of crime and projects it as untainted money, shall be guilty of the offence of money laundering. The ED is likely to invoke several other stringent sections of the PMLA and also freeze the bank accounts pertaining to the OMC and Gali brothers.“ED has prepared its own report in the illegal mining case. The ground work has been done and the final nod (from Union Finance Ministry) is awaited (for registering a case),” a source said.The CBI believes, say sources, that Gali brothers, may have laundered money by using benami companies, bogus loans, creditors, investors and foreign capital, especially by inflating the balance sheet and profit and loss accounts of individuals and companies in his group. During an Income Tax raid in Karnataka in August 2010, the officials stumbled upon documents that showed that the Reddy brothers had reportedly invested thousands of crores of rupees in some companies in Indonesia and Singapore.“The IT department has also shared information with the CBI on certain bogus companies floated by the Reddys in Bahamas and Mauritius among other countries,” sources said.Certain leads indicating violations under the Foreign Exchange Management Act (FEMA) by a company floated by Janardhan Reddy’s wife, Gali Lakshmi Aruna (GLA) were also reportedly found.