No relief for Chennai bizman linked to Rs 1 lakh crore corruption case in Brazil

CHENNAI: Refusing relief to a Chennai-based businessman who is suspected to be involved in one of the largest corruption cases in faraway Brazil, the Madras High Court dismissed his plea seeking a direction to the Directorate of Enforcement (ED) to de-freeze his bank account.

The case dates back to November 2018, when the Central Authority of India received a formal request from the Central Authority of Brazil, seeking legal assistance in a criminal matter that included breach of bank secrecy and the collection of financial information of accounts that were used for money laundering by a transnational criminal organisation.

The investigation involved Sergio Cabral, the former Governor of Brazilian city Rio de Janeiro, who allegedly indulged in largescale corruption. According to the prosecutors there, he siphoned off a whopping Rs 1 lakh crore by funnelling the money into 3,000 offshore companies with the help of Uruguay-based financial operators.

Of that amount, Rs 100 crore was transferred to the bank accounts of 47 Indian entities, and among them was Chennai-based Royal Impex and its proprietor Gulab Punwani. Based on the information shared by the Brazilian government, the bank accounts of Royal Impex and Punwani were allegedly used for the transaction of unaccounted corruption money, the ED alleged.

The central agency claimed that Punwani received Rs 2.81 crore against the corruption money generated in Brazil. Hence, on April 29, 2022, the assistant director of ED, Delhi, issued an order freezing the bank accounts of the petitioner and his company.

When his petition challenging this came up for hearing, a division bench of Justice SM Subramaniam and Justice V Sivagnanam cited Mahatma Gandhi’s famous quote: "The Earth provides enough to satisfy every man's need, but not every man's greed" and dismissed his plea.

The bench added that a corrupt man, after using the resources that is given to him by this Earth, also takes away those that are given to others. Corruption results in the diversion of benevolent funds that are meant to be spent for the purpose of economic and social upliftment of the country, thus slowing down the socio-economic growth of the country, the bench wrote while dismissing the petition seeking to de-freeze his bank accounts.

However, as the order of freezing the account was appealable under section 26 of the Prevention of Money Laundering Act (PMLA), the bench granted him liberty to approach the Appellate Tribunal for relief.