ED seizes ₹21 lakh in ₹200-Cr CSR donation scam, 40 PSUs under scanner

The searches revealed an alleged network of charitable trusts, trustees, CSR agents, middlemen and equipment suppliers involved in the diversion and recycling of CSR funds

MUMBAI: The Enforcement Directorate (ED) on Thursday seized 21 lakh in cash, incriminating documents and digital devices during its multi-state searches at eight locations, including Mumbai, as part of its probe related to an alleged ₹200-crore bogus Corporate Social Responsibility (CSR) donation racket run by Dharmendra Kumar Chandradev Singh and others.

ED seizes ₹21 lakh in ₹200-Cr CSR donation scam, 40 PSUs under scanner

The searches revealed an alleged network of charitable trusts, trustees, CSR agents, middlemen and equipment suppliers involved in the diversion and recycling of CSR funds. At least 40 public sector units (PSUs) and PSU banks across the country allegedly provided CSR donations to the trusts operated by the accused towards what were projected as legitimate CSR initiatives, ED officials said on Monday.

The probe is based on a cheating case registered on July 12 by the Juhu police station against Singh, who represented himself as a doctor for nearly 30 years despite lacking any educational qualifications. He set up a network of charitable trusts and entities purportedly engaged in healthcare-focused CSR activities, and allegedly mobilised a substantial amount of CSR funds from public sector units (PSUs) and private corporates.

ED officials said that CSR projects were pitched to the PSUs but were not executed in proportion to the funds received. Vendor bills were inflated and the excess amounts siphoned off through bogus/ shell entities. Kickbacks or commissions were allegedly paid to middlemen and brokers who facilitated the procurement of CSR funds while cash received from private entities was allegedly recycled or returned to them in cash after retaining a commission.

A further investigation revealed that the trusts were projected as vehicles for funding the procurement of high-end medical equipment for hospitals and healthcare institutions. When these institutions cited a lack of funds for procuring this equipment, they were connected with local public representatives who allegedly issued recommendations for their funding, specifically through the trusts operated by Singh. “The PSUs made CSR donations to these trusts primarily on the strength of recommendations from public representatives,” an ED official said.

The ED’s searches also revealed a network of CSR agents and intermediaries who allegedly channelled CSR funds to the trusts, which were thereafter routed through shell entities. “Most of these entities have also been flagged in multiple GST fraud investigations, “the ED official said.

The CSR mechanism was allegedly utilised as a conduit for conversion of accounted funds into unaccounted cash. “Around ₹200 crore is understood to have been routed through this mechanism,” an ED officer said.