Hyderabad: The Appellate Tribunal under SAFEMA (Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act) has upheld the Enforcement Directorate’s attachment of a London-based insurance policy of industrialist Koneru Pradeep, son of Koneru Rajendra Prasad, in the money-laundering case linked to the Emaar Hills Township land development project, rejecting his contention that ED had already attached properties equivalent to the entire identified proceeds of crime.The single bench of member Rajesh Malhotra, in an order dated August 11, dismissed Pradeep’s appeal and upheld the Adjudicating Authority’s May 25, 2022 order confirming the attachment of Scottish Provident International, London, described as a Momentum Single Life policy.The policy carries a maturity value of USD 250,000 and a surrender value of about USD 120,000.Pradeep said policy predated alleged Emaar scamPradeep challenged the attachment on the ground that the policy had been purchased on July 3, 1998, years before the alleged Emaar transactions during 2005-2010. He argued that premiums were paid as a gift by his elder brother Madhu Koneru from legitimate business funds of Rescom Holdings, formerly Trimex International FZE.He also relied on the Telangana high court’s order quashing money-laundering proceedings against Madhu Koneru, contending that this supported his case that the funds used for the insurance premiums were legitimate.Another central argument was that ED had already attached properties covering the identified proceeds of crime of about Rs 167 crore through earlier provisional attachment orders. According to Pradeep, properties worth about Rs 71 crore had been attached under an earlier orders cited in the pleadings, while another Rs 96 crore worth of properties was attached under another order.The Rs 96 crore attachment included 36 acres and 14 guntas of agricultural land in Bailkal and Mallikarjunagiri villages held in Pradeep’s name and valued at Rs 12 lakh. The land formed part of acquisitions worth Rs 2.5 crore which, according to ED, were made using siphoned cash.Pradeep argued that once assets equivalent to the entire quantified proceeds of crime had already been attached, attaching another property amounted to going beyond the identified proceeds of crime.He further alleged non-application of mind by the Adjudicating Authority, pointing to a reference to an unrelated company name in the proceedings under Section 5(1).ED traces premium payments to offshore fund trailED opposed the appeal, arguing that the fact that the insurance policy originated in 1998 did not insulate it from attachment because premium payments continued until 2014.According to ED, proceeds generated from the Emaar transactions were routed through offshore entities before reaching Madhu Koneru, who subsequently made payments towards Pradeep’s insurance policy. ED contended that money laundering was a continuing offence and that premium payments made during the period under investigation could be examined irrespective of the original date of purchase of the policy.On the relief granted to Madhu Koneru, ED argued that proceedings against him were quashed because he lacked knowledge that the funds represented proceeds of crime. It contended that the relief did not alter the alleged criminal origin of the underlying funds generated by Koneru Rajendra Prasad.ED also pointed out that Pradeep continues to face trial in Special Court Case.The agency contested Pradeep’s argument that attachment had crossed the quantified proceeds-of-crime figure. It submitted that the alleged transactions involved large amounts of unrecorded cash and that an exact maximum threshold of proceeds of crime could not be rigidly fixed on the basis of amounts detected at a particular stage.It also termed the reference to an incorrect company name in the attachment proceedings a clerical error which, according to the agency, did not affect the material relied upon for the attachment.Background: ED case: Rs 96 crore cash collected from 82 villa buyersThe money-laundering case arose from the Emaar township and golf course project at Manikonda village in Ranga Reddy district.In 2002, the then Andhra Pradesh government allocated 535 acres for development of an integrated golf course and township. Emaar Hills Township Pvt Ltd was formed as a special purpose vehicle, with Andhra Pradesh Industrial Infrastructure Corporation holding 26% equity and the developer holding the remaining 74%.The case against the accused is that plots were shown in records as having been sold at Rs 5,000 per square yard while additional cash premiums of Rs 40,000 to Rs 45,000 per square yard were collected from buyers through an agency arrangement.According to the case record, accused Tummala Ranga Rao, acting under the instructions of Koneru Rajendra Prasad, collected Rs 96.01 crore in cash from 82 villa plot buyers. The money was allegedly kept outside EHTPL’s books, depriving APIIC of its corresponding revenue share.ED alleged that Rs 2.5 crore from the siphoned cash was initially used to acquire land in Pradeep’s name. Following CBI chargesheets and the subsequent PMLA investigation, ED attached his Scottish Provident insurance policy in 2021.The total proceeds of crime identified in the Emaar case have been placed at Rs 167 crore, while Pradeep’s submissions referred to the figure as Rs 167 crore. The computation comprises Rs 96 crore in cash premiums collected from villa plot buyers through Stylish Holmes, Rs 6.8 crore collected over the documented sale price through Emaar MGF Land Ltd, and Rs 64.41crore representing profit before tax allegedly due to EHTPL but siphoned off or not accounted for.ends
