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The Enforcement Directorate on Tuesday alleged that Dravida Munnetra Kazhagam leader and Tamil Nadu Higher Education Minister K Ponmudy issued "illegal" red sand mining licenses to his MP son, relatives and some benami holders, and that huge amount of "hawala" funds generated from this mining business was used to purchase companies abroad.
It said it has seized "unexplained cash" of Rs 81.7 lakh and foreign currency, primarily British pounds, equivalent to about Rs 13 lakh from Ponmudy's residence apart from fixed deposit receipts worth Rs 41.9 crore.
The federal agency raided the premises of the 72-year-old minister and his son Gautham Sigamani in Chennai and Villupuram district on Monday following which it took them to its office in Chennai for an overnight questioning and recording of statement.
The two were summoned again on Tuesday around 4 pm for questioning by the Enforcement Directorate (ED).
The agency said its probe in this case revolves around "alleged issuance of red sand mining licenses at five locations illegally by Ponmudy, who was the mines minister (between 2007 and 2011), to his son, relatives, and benami holders".
"The proceeds obtained from illegal mining were deposited in benami accounts and were layered through multiple transactions and accounts," the ED claimed.
Eventually, two overseas entities -- PT Excel Mengindo in Indonesia and Universal Business Ventures FZE in the UAE -- were acquired, it said.
The Indonesian company was shown to have been "purchased" for a nominal amount of Rs 41.57 lakh and it was later "sold" for over Rs 100 crore in 2022, the ED said.
"It is suspected that huge amount of cash was transferred through hawala and infused in purchase of these overseas entities," it said.
Talking about the seizure of cash, the ED said, "In order to mislead the probe, a claim that the cash belonged to a family-owned hospital was made, and an attempt to falsify accounting records to introduce cash was detected (by the ED) and prevented."
A corroborating statement, the ED said, attesting to the above facts was obtained from one person concerned and thus there is no plausible explanation for this unexplained cash seized from the residence of Ponmudy.
The agency claimed that it has detected a trail of "illegal" proceeds derived from these "illicit" activities which are being used to acquire properties and companies, and also channelling into other investments.
"Various incriminating documents have been found, seized and are currently under analysis," it said.
Tamil Nadu Chief Minister and DMK chief M K Stalin spoke to Ponmudy over phone after he got back home from the overnight questioning session at the ED office and assured him the ruling party's total support in countering the BJP's "political vendetta".
"The chief minister told Ponmudy the party (DMK) will support (him) morally, politically and legally to oppose and break the political vendetta of the Union BJP government," an official release said.
Stalin is in Bengaluru to attend the meeting of opposition parties to counter the saffron party.
Ponmudy is an MLA from the Tirukkoyilur Assembly seat in Villupuram district, while his 49-year old son Sigamani is a member of Parliament representing the Kallakurichi seat.