ED registers money laundering probe for alleged oxygen plant fraud in Mumbai

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The Enforcement Directorate (ED) has registered a money laundering case linked to a purported scam involving the installation of oxygen plants in hospitals during the Covid-19 pandemic, police told PTI on Saturday. According to the report, on November 24, the Economic Offences Wing (EOW) allegedly arrested contractor Romil Chheda from M/s Highway Construction Company for allegedly causing the Brihanmumbai Municipal Corporation (BMC) to suffer a loss of Rs 6 crore.

About this fraud case involving Chheda, the Enforcement Department (ED) began action on Friday under the Prevention of Money Laundering Act (PMLA). He was assigned to set up oxygen facilities in two large Covid-19 centres and nine hospitals run by BMC, even though he was said to have no prior experience with such projects, the report added.

At Byculla's municipal workshop and oxygen plants, which are situated at civic-run hospitals like V N Desai, Dr Babasaheb Ambedkar, GTB, Kasturba, BYL Nair, R N Cooper, K B Bhabha, KEM, and ATMG Sion, malpractice took place between April 2021 and January 2022, the report further stated.

Preliminary inquiries indicate that local authorities may have disregarded eligibility requirements in contract awarding. The BMC lost Rs 6 crore as a result of the oxygen plants not being finished in the allotted time. The agreement called for a 30-day completion window or a weekly fine of 1% for delays.

Even though Chheda was fined Rs 3.16 crore for his delays, more investigation showed that BMC officials should have enforced penalties of an extra Rs 6 crore from him. The EOW has filed a complaint against officials from Chheda and BMC for several crimes, including inflicting unlawful loss, defrauding, and forgery. Sections of the Indian Penal Code under which they were booked are 418 (cheating knowing that wrongful loss may ensue), 465 (Punishment for forgery), 467 (forgery of will, valuable security), 468 (Forgery for purpose of cheating), 471 (fraud), 218 (Public servant framing incorrect record), 120 (B) (conspiracy) and 34 (common intention).

Chheda was recently arrested as a part of EOW's broader investigation into various Covid-19-related scams. Reportedly, the EOW is also investigating the kichdi scam, body bag scam and jumbo centre scam. The EOW sources had previously told mid-day that Chheda's influence to secure BMC contracts through political connections, including his ties to Suraj Chavan, who is Aaditya Thackeray's aide, is under scrutiny in the aforementioned scams. Over the past five years, Chheda has reportedly obtained several BMC contracts, some of which were acquired through power of attorney.