ED Uncovers 322 Mule Account Passbooks in Manish Sisodia’s Alleged Rs 2,000 Crore Fraud Case

Further Inspection of the (Alleged) Scam

It is going to be a major breakthrough in the slotted investigation of the claimed 2,000 crore fraudulent case in which as per the recent reports, the Enforcement Directorate (ED) has reportedly discovered a whopping 322 passbooks in affairs which are suspected to have involved the so-called mule accounts. Such accounts have been deemed to be very vital in the investigation, which highlights former Delhi Deputy Chief Minister Manish Sisodia and others in alleged financial malpractices concerning the construction of classrooms in Delhi government schools.

The find of so many mule account passbooks would indicate an elaborate system to conceal the flow of illegal money. Mule accounts are basically bank accounts, mainly opened in the name of unsuspecting or complicit persons, which are opened by criminals where they get to transfer illegally acquired money. The idea is to eliminate the source and destination of such money so that it is very hard to enable law enforcers to follow the money trail to its roots where fraudsters are manipulating the money.

The so-called classroom construction scam

The main reasons behind the case against Manish Sisodia and others are related to the allegations of a huge scam in terms of constructing 12748 classrooms in Delhi government schools. The Anti-Corruption Bureau (ACB) of the Delhi government had started the investigation with reference to a complaint that tenders for construction of classrooms were being obtained at hugely inflated prices. The report by ACB calculated the average cost to be spent in each classroom to be 24.86 lakh, whereas the general estimate of such construction in the capital city of Delhi was 5 lakh w.r.t per unit. This difference brought about an estimated financial anomaly of 2000 crore rupees.

Live was awarded for the project spread out in different zones of Delhi government schools and the project claimed to have 34 contractors, many of which were said to be closely linked with the ruling party of Delhi at that time. The participation of ED in the case falls under the Prevention of Money Laundering Act (PMLA), which enables ED to conduct and prosecute money laundering related crimes. The discovery of the money balances suggests that ED is also interested in tracking down the flow of funds attributed to the suspected fraud.

Mule Accounts and the way they work in fraud schemes.

In fraudulent financial crimes such as the one being accused, mule accounts act as necessary mediators. They come in handy during the process of money laundering as it has been applied in what is termed the layering process where criminal money is transferred through a series of transfers and accounts in a bid to hide the illegal nature of their source of funds. A simplified description of how they normally work is shown below:

Fund Reception: The funds involved in the first criminal act (of defrauding via purportedly over-valued construction contracts in this case) are funneled into those mule accounts. These accounts could be opened with fake names or find people who are unaware they are committing a crime or people that are willing accomplices who are usually rewarded with a small commission.

Layered Transactions: Upon the money being deposited in a slave account, it is promptly transferred to a number of other accounts which may span a number of banks or even countries. This gives rise to a dense network of transactions and keeping track of the money flow becomes difficult to trace by investigators.

Withdrawal or Integration: Lastly, the laundered money is cash withdrawn or used to fund apparently legitimate businesses, and property and investments appear as washable money.

The quantity of pass books (322) detected by the ED indicates a high-end and well-planned mechanism of distribution and hiding of the so-called 2000 crores. Every passbook might denote a single mule account leaving a wide base of people or shell organisations to conduct this illegal financial transfer.

Lawsuits and Current Investigations

Manish Sisodia has already been charged legally, since being arrested by the Central Bureau of Investigation (CBI) in terms of the Delhi liquid excise policy scandal in February 2023. He lived for quite sometime in jail and got bail. The case that is being discussed in the classroom construction scam is a different but equally grave issue that brought to the fore the multi-agency investigation into the allegation of corruption during his time in office.

Findings of the mule accounts’ passbooks added more chips to the case of ED, which is concrete evidence as to how the supposed ill-gotten funds were being used and stashed. What should now become an interesting area of exploration would be who are the persons behind these mule accounts, how are they linked with the main accused, and what is the final destination of the purported fraud? The legal procedure would be complex and lengthy with plenty of forensics of money and thousands of transactions that would be scrutinized.

To the Delhi government, such allegations and persistent investigations pose a very big question about its reputation and integrity. The ED findings create a new spotlight on the previous work on public works and financial management of the past administration. Another lesson of the case is the ongoing attempts by investigative agencies to fight financial fraud and money laundering, especially in cases where there is involvement of public figures. The discovery of that many passbooks of mule accounts is a possible sign of a big step forward in the process of disentangling the financial aspect of this crime, addressed as an alleged scam.