HYDERABAD: The Enforcement Directorate has attached movable and immovable properties worth Rs 59.37 crore belonging to Arun Panchariya, Sanjay Aggarwal and M/s India Focus Cardinal Fund in a GDR (Global Depositary Receipts) scam pertaining to M/s Farmax India Limited, Hyderabad under the provisions of the Prevention of Money Laundering Act, 2002 (PMLA).
The agency initiated PMLA investigation on the basis of an FIR registered by the Telangana police against Jalaj Batra, Sanjay Aggarwal, Arun Panchariya, Mukesh Chauradiya and others under various Sections of the IPC.
The ED investigation revealed that Arun Panchariya, a person of Indian origin residing abroad, and entities connected to him -- Pan Asia Advisors Limited (now known as Global Finance and Capital Ltd), India Focus Cardinal Fund and Vintage FZE (now known as Alta Vista International FZE) along with his associates Sanjay Aggarwal, Jalaj Batra and others designed and executed a fraudulent GDR scheme in connivance with Morthala Sreenivas Reddy and Morthala Malla Reddy, the promoters/ directors of Farmax India Limited to cheat investors.
When GDRs of an Indian company are 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, despite any bonafide future forex requirements, GDR proceeds amounting to US$ 71.91 million (equivalent to Rs 318 crore at the exchange rate prevailing at the time of issuance of GDRs in June and August 2010) were not repatriated to India.
GDR proceeds amounting to US$ 56.57 million, which were received in Farmax India’s bank account in EURAM Bank, Austria, were pledged as security against the loan taken by the GDR subscriber M/s Vintage FZE.
Further, the non-repatriated GDRs were transferred to M/s India Focus Cardinal Fund which was controlled by Arun Panchariya.M/s India Focus Cardinal Fund converted and sold the shares acquired from M/s Vintage FZE in the Indian securities market and sale proceeds amounting to Rs 51.76 crore were kept with them.