HYDERABAD: The teams of the Enforcement Directorate (ED), during their searches at granite companies in the Karimnagar district, found several irregularities and Foreign Exchange Management Act (FEMA) violations in the way the firms did business in the last 10 years. The agency found that the companies resorted to under-reporting as their exported quantity was more than the quantity on which royalty was paid.
The ED teams collected evidence that in many instances the export proceeds were not realised in the declared bank accounts, thereby, indicating that the export proceeds are received through other than banking channels. During the search action, the ED teams found and seized unaccounted cash of Rs 1.08 crore, allegedly received in hawala transactions against exports and also seized voluminous granite dispatch data of 10 years from the quarries, an official press release from the ED said.
At the time of searches, the ED teams also found multiple bank accounts held in the name of employees of granite exporters, in which cash was received against the illegal granite exports. The teams also detected money being routed back from Chinese entities into Indian entities in the form of hand loans without documents. These Chinese entities are owned by Li Wenhuo, whose name appeared in Panama leaks, the press release said.
Large-scale evasion of seigniorage fee
The ED investigation into illegal granite mining and FEMA violations has been initiated on the basis of a report from the Vigilance & Enforcement Department of the State government. The report said that there was a large-scale evasion of seigniorage fee on granite blocks transported from the quarry lease areas of Karimnagar district to the sea ports by Railways was detected and that the companies did not pay though demands had been raised for payment of royalty.
The ED teams conducted searches on November 9 and 10 at the offices and residential premises of Swetha Granites, Swetha Agencies, Sri Venkateshwara Granites Private Limited, PSR Granites Private Limited, Arvind Granites, Giriraj Shipping Agencies Private Limited and their related entities in Karimnagar and Hyderabad to investigate and unearth evidence pertaining to FEMA violations. The above entities export rough granite blocks to China, Hong Kong and other countries.
In 2013, the erstwhile Andhra Pradesh Vigilance and Enforcement Department inquired into the evasion of a seigniorage fee of Rs 124.94 crore. Together with a penalty of Rs 624.72 crore, the total amount payable by them was a whopping Rs 749.66 crore. Though some companies had paid Rs 5 crore to the government, the balance amount remained unpaid.
Illegal transactions
During their searches, the ED teams found multiple bank accounts held in the name of employees of granite exporters, in which cash was received against the illegal granite exports. The teams also detected money being routed back from Chinese entities into Indian entities in the form of hand loans without documents. These Chinese entities are owned by Li Wenhuo, whose name appeared in Panama leaks, the press release said