ED seizes Q City based on probe into foreign assets
The seizures were conducted under provisions of the Foreign Exchange Management Act (FEMA), 1999, in lieu of assets illegally held abroad in contravention of Section 4 of the FEMA, the ED said.
Published: 01st August 2019 05:45 AM | Last Updated: 01st August 2019 05:45 AM | A+A A-
HYDERABAD: The Enforcement Directorate (ED) on Wednesday seized Q City tech park, spread over 2,500 sq yards in the city’s I-T corridor, after an investigation into illegal foreign assets. The employees of the four IT firms that operate from Q City, however, were unaware of the seizure and said on Wednesday night that their employers had not given them any instructions on reporting for work the next day.
Q City, a venture of M/s Mack Soft Tech Private Limited (MSTPL), Hyderabad, has building space worth Rs 86.38 crore.
The seizures were conducted under provisions of the Foreign Exchange Management Act (FEMA), 1999, in lieu of assets illegally held abroad in contravention of Section 4 of the FEMA, the ED said, adding that it initiated its probe on the basis of information that M/s MSTPL remitted a huge amount of funds outside India.
The investigation revealed that M/s MSTPL illegally transferred foreign funds to the tune of $12,500,000 (Rs 62.08 crore) to Orient Guide Investments Limited, Hong Kong, under the guise of buying a non-existent software licence.
Further, from November 2011 to December 2016, M/s MSTPL made foreign exchanges of $3,980,000 (Rs 24.30 crore) to Senat Legal Consultancy FZ LLC, UAE, and Cresco Legal Consultancy FZ LLC, UAE, in the name of legal services. These were sham transactions, the ED said.
‘Payments were made to siphon funds’
“(The) foreign outward remittances on the pretext of purchase of software license and legal services were made with a view to siphon off funds from India and park them abroad,” the ED said. As illegal holding of foreign assets is a contravention of FEMA, the ED may seize equivalent assets in India. Hence, Q City was seized