The Enforcement Directorate on Friday said it has attached assets worth more than Rs 59 crore of a Person of Indian Origin (PIO) based in London and some other entities as part of a money laundering investigation linked to an alleged global depository receipts (GDR) scam.
A GDR is defined as a negotiable financial instrument issued by a depository bank and it enables a company to reach investors in capital markets abroad.
The properties belong to London-based Arun Panchariya, Sanjay Aggarwal and India Focus Cardinal Fund. The assets with a total value of Rs 59.37 crore have been seized in a probe pertaining to Hyderabad-based Farmax India Limited, the ED said in a statement.
Panchariya and his linked entities like London-based Pan Asia Advisors Limited (now known as Global Finance and Capital Limited), India Focus Cardinal Fund and Vintage FZE (”Vintage” – now known as Alta Vista International FZE) along with his associates like Aggarwal, Jalaj Batra and others designed and executed a ”fraudulent” GDR scheme in connivance with Farmax India Limited promoters/directors Morthala Sreenivas Reddy and Morthala Malla Reddy to ”cheat and defraud the Indian investors”, the ED alleged.
According to rules, when GDR of an Indian company is subscribed abroad, the proceeds are mandated to be repatriated to India unless they are deposited abroad to meet future forex requirements.
However, in the case of Farmax India Limited, GDR proceeds amounting to USD 71.91 million (equivalent to Rs 318 crore at prevailing exchange rate at the time of issuance of GDRs in June and August 2010) were not repatriated to India, even as there were no bonafide future forex requirements, the ED said.
The GDR proceeds amounting to USD 56.57 million, which were received in Farmax India Limited’s bank account in EURAM Bank, Austria were pledged as security against the loan taken by GDR subscriber Vintage FZE, it said.
The money laundering case stems from a Telangana Police FIR filed against the accused earlier.
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