Ranchi, July 6: The Enforcement Directorate (ED) has started a probe against two high-profile companies based in Jharkhand for alleged violations under Foreign Exchange Management Act (FEMA), including one owned by a close relative of industrialist R.K. Agrawal, accused in the Rajya Sabha cash-for-vote scam.
In a hush-hush directive last week, ED headquarters ordered a probe against Orissa Manganese and Minerals Ltd (a sister concern of Adhunik Group) owned by Sachin Agrawal, and a group of companies, including Shah Sponge belonging to Jamshedpur industrialist Raj Kumar Shah, whose son is married to R.K. Agrawal’s daughter.
Orissa Manganese and Minerals and Shah’s companies have flouted FEMA norms in foreign transactions, the ED’s preliminary investigations say.
The ED has apparently dug up some foreign transactions made by the duo in the past one-and-a-half years that were done without RBI’s knowledge and did not reflect on tax returns as well, a complete violation of FEMA guidelines.
Amritanshu Prasad, executive director of Adhunik Group based in Ranchi, stayed mum. “I can’t comment without verifying facts. This has not come to my knowledge so far,” Prasad said.
Though Sachin Agrawal and Raj Kumar Shah, as well as their employees, are quiet, they must be relieved that they have to deal with FEMA, an investor-friendly Act passed by the Parliament in 1999 to meet the demands of a post-liberalised economy.
Though FEMA keeps tabs on unauthorised foreign transactions by any company or individual in violation of RBI guidelines, it is far less draconian than its predecessor FERA.
Cases under FEMA are civil. If charges are proved, a fine is imposed. Under FERA or Foreign Exchange Regulation Act of 1973, foreign exchange violations were criminal.
Orissa Manganese and Minerals owns an iron ore mine on the borders of West Singhbhum-Odisha and a processing unit in Kandra.
The Shahs also have stake in mining. Shah first hit the headlines in March 2012, when his samdhi and then Rajya Sabha candidate R.K. Agrawal tried to fob off responsibility of Rs 2.15 crore in cash seized from a car on the capital’s outskirts. Agrawal claimed the money belonged to Shah.
What: Foreign Exchange Management Act (1999)
Why: To ease external trade and payments and regulate India’s foreign
exchange: Deposits, credits and balances payable in foreign
currency, as well as drafts, travellers’ cheques, letters of credit or bills of
exchange, expressed or drawn in Indian currency but payable in foreign
currency, or vice-versa
FEMA covers: All parts of India and all branches, offices and agencies
outside India owned or controlled by a person
who is a resident of India