ED conducts raids in Suumaya-Dentsu embezzlement case

The Enforcement Directorate nforcement Directorate (ED) conducted extensive search operations on Tuesday, December 10 at 19 locations across Mumbai, Delhi, and Gurgaon as part of its investigation into the Suumaya-Dentsu money laundering case. The case involves allegations of embezzlement amounting to ₹137 crore. During the raids, the ED seized assets, including ₹46 lakh in Indian currency, ₹4 lakh in foreign currency, and gold bars valued at ₹3.4 crore.

The ED's investigation stems from a case registered by Worli Police in March 2022 against Suumaya Industries, Dentsu Communications India, and their promoters. The entities are accused of conspiring to divert ₹137 crore under the guise of benefits from a non-existent 'Need to Feed' program, allegedly linked to the Haryana government.

The ED has stated that no such program was ever operational, and the accused entities did not supply any agricultural products as claimed. Instead, they allegedly fabricated records, including fake lorry receipts and invoices, to create the appearance of legitimate transactions.

Initial investigations have revealed that entities linked to the Suumaya group engaged in transactions totalling ₹5,000 crore, of which only 10% were genuine. These transactions were reportedly structured in a circular pattern to artificially inflate the companies' turnover, including that of Dentsu India.

This fraudulent activity misled investors, resulting in inflated share prices and financial misrepresentation. For instance, Suumaya Industries' turnover surged from ₹210 crore to ₹6,700 crore between FY 2019-20 and FY 2021-22, with its share price increasing from ₹19 to ₹736 per share during the same period.

The circular transactions were also used to boost the turnover of entities seeking government contracts, startups aiming for higher valuations, and other financial objectives.

The ED's investigation further uncovered evidence of collusion between stockbrokers and merchant bankers, who facilitated cash payments for commodity contracts on the National Commodity and Derivatives Exchange (NCDEX) and the acquisition of companies subsequently listed on the stock exchange.

Dentsu India has addressed the recent visit by the Enforcement Directorate (ED) to its Mumbai office, confirming that the action was related to a case involving suspected fraudulent activity within its InDeed business. In a statement, the company explained that the activity, which involved third parties and former employees of InDeed, was reported to the relevant authorities three years ago, and Dentsu has been fully cooperating with the investigation since then.

Its statement read, "It is in connection with the same matter that the Enforcement Directorate (“ED”) visited Dentsu India’s office in Mumbai on December 10, 2024. The ED has not found or seized any properties from Dentsu’s premises. We take fraud and wrong-doing very seriously with a zero-tolerance policy towards any such behaviour. We will continue to co-operate with the authorities."

The ED is continuing its probe into the matter to uncover the full extent of the financial irregularities and to identify all parties involved in the alleged embezzlement.