The Congress on Thursday raised questions over Life Insurance Corporation's (LIC) 10.8 per cent stake in Rajesh Exports Ltd (REL) after market regulator SEBI flagged what the opposition party described as a "gigantic scam" involving alleged revenue inflation and financial misrepresentation by the company. The party sought answers on whether LIC's investment in the firm was influenced by the "ruling ecosystem", citing the insurer's significant exposure to a company now under regulatory scrutiny.
Congress general secretary in-charge communications, Jairam Ramesh, said SEBI's interim order dated June 3, 2026, had alleged serious irregularities at Rajesh Exports, a major player in the gold refining and jewellery business.
"SEBI says that there has been a massive misrepresentation of revenues spanning a five year period 2020/21-2024/25 that could amount to a staggering Rs 15 lakh crore," Ramesh said.
"This is a mind-boggling number. Investigations are continuing and a final report is awaited," he added.
Flagging LIC's exposure to the company, Ramesh said, "What is particularly disturbing is that LIC owns around 10.8% of Rajesh Exports."
He also claimed that banks have considerable exposure to the company and questioned how such alleged irregularities could have gone unnoticed.
"How could LIC have missed such a huge fraud taking place in a company in which it has a substantial stake?" Ramesh asked.
"This raises the question of whether LIC's acquisition of such a substantial stake was driven by instructions from the ruling ecosystem," he said.
Sebi bars promoter, CEO Rajesh Mehta
The Congress' remarks came a day after the Securities and Exchange Board of India (SEBI) barred Rajesh Exports promoter and CEO Rajesh Mehta from dealing in the company's securities, alleging large-scale misrepresentation of financial statements and diversion of funds.
The regulator also directed the company to make true and fair disclosures of its financial statements, related-party transactions and other disclosures under the Listing Obligations and Disclosure Requirements (LODR) regulations.
In its 109-page interim order, SEBI said its investigation revealed misrepresentation in financial statements as well as instances of routing and layering of funds through personal accounts and related entities without adequate disclosures or supporting documentation.
The regulator said the company was issued repeated summons and given several opportunities to furnish records explaining the end-use, business rationale and ultimate beneficiaries of fund flows, but received no satisfactory response.
Revenue inflation, auditor non-cooperation flagged
SEBI also flagged non-cooperation by REL's statutory auditors. According to the order, the auditors had promised to provide audit working papers during their deposition but subsequently failed to do so.
The regulator said such sustained non-cooperation was indicative of an attempt to suppress material information and obstruct regulatory inquiry.
Among the findings, SEBI observed that about 97-99 per cent of REL's reported revenue appeared to have been inflated — an irregularity it described as "egregious and unheard of".
The order held that Mehta was the key decision-making authority within REL and exercised substantial control over the day-to-day affairs and financial operations of the company and its subsidiaries.
SEBI has restrained Mehta from buying, selling or dealing in REL securities, directly or indirectly, until further orders. It also directed the company and Mehta to cooperate with investigators and furnish all documents and explanations sought within 30 days.
The regulator further ordered the appointment of a new forensic auditor after noting inadequate cooperation during an earlier forensic audit exercise.
Rajesh Exports rejects SEBI allegations
A day after SEBI's interim order, Rajesh Exports denied allegations that it had inflated revenues by Rs 15.15 lakh crore and said the regulator's findings were preliminary in nature.
In a stock exchange filing on Thursday, the company maintained that its financial disclosures were accurate and said it was in the process of providing additional documents to the regulator.
"The revenues declared by the company are correct and there is no over stating of revenues," Rajesh Exports said.
The company suggested that the dispute may have arisen from a misunderstanding between the regulator and the firm.
"There seems to be some type of communication gap and confusion between SEBI and the company," the filing said.
Rajesh Exports said it was cooperating with the regulator and furnishing all records sought during the investigation.
"The company is in the process of clarifying all aspects to SEBI by submitting all the required and relevant documents," it added.
The company also emphasised that the regulator's order was not a final determination.
"The order is interim and there has been no any adverse conclusion on any aspect arrived by SEBI," it said.
Rajesh Exports expressed confidence that the issues raised by the regulator would be resolved after a review of the documents being submitted.
Investigation and market reaction
The current proceedings stem from a complaint received by SEBI on March 11, 2024, from an REL shareholder alleging potential financial misrepresentation linked to a large amount of trade receivables that had remained outstanding for more than two years.
The investigation covers the period from April 1, 2020, to March 31, 2024.
Following the SEBI order, shares of Rajesh Exports came under pressure on Thursday. The stock fell 4.99 per cent to hit its lower circuit limit at Rs 104.65 on the BSE, while it declined 4.99 per cent to Rs 103.92 on the NSE.