In connection with an alleged global depository receipts (GDR) fraud, the Enforcement Directorate said on Friday that it has attached assets totaling more than Rs 59 crore from a Person of Indian Origin (PIO) residing in London and some other organizations.
A GDR is a tradable financial instrument issued by a depository bank that allows a business to connect with investors on international capital markets.
The homes are owned by Arun Panchariya, Sanjay Aggarwal, and India Focus Cardinal Fund, all of London. The ED said in a statement that the assets, having a combined worth of Rs 59.37 crore, were confiscated as part of an investigation into Hyderabad-based Farmax India Limited.
In collaboration with the promoters and directors of Farmax India Limited, Morthala Sreenivas Reddy and Morthala Malla Reddy, Panchariya and his affiliated companies, including 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), designed and carried out a “fraudulent” GDR scheme.
If a GDR of an Indian firm is subscribed for outside of India, the profits must be returned to India unless they are placed outside of India to cover future foreign exchange needs.
The ED stated that despite the fact that Farmax India Limited had no legitimate future forex requirements, GDR proceeds totaling USD 71.91 million (roughly equivalent to Rs 318 crore at the time of issuance of GDRs in June and August 2010) were not repatriated to India.
Vintage FZE, a GDR subscriber, borrowed money and committed the revenues of the GDR, totaling USD 56.57 million, as security, according to a statement from Farmax India Limited.
The Telangana Police filed a First Information Report (FIR) against the defendants prior to the money laundering case.
