The Enforcement Directorate on Wednesday alleged that gold refining and jewellery manufacturing company Rajesh Exports' key business indicators showed "significant" departures from normal commercial practices, in addition to the non-availability of records related to foreign transactions.
The federal agency issued a statement after conducting searches against the Bengaluru-based company and persons linked to it on June 23 for suspected contravention of the Foreign Exchange Management Act (FEMA).
The ED identified at least five issues against Rajesh Exports Ltd (REL) and recovered various "incriminating" documents and digital devices during the searches.
The company has not yet responded to a PTI query regarding the ED action. The stock exchanges have also sought clarification from the company.
Founder and Chairman of the company, Rajesh Mehta, denied any fund diversion or wrongdoing during a recent interview with PTI. He had said that the company will fully cooperate with the fresh forensic audit ordered by the SEBI and not challenge the market regulator's interim order against it.
According to the ED, Rajesh Exports "failed" to produce documentation regarding its foreign transactions, including its imports, exports, overseas investments and the settlement of foreign trade receivables and payables, which rendered verification of the genuineness of such transactions almost impossible.
"For example, contemporaneous records and documentation of the claimed investment of Rs 1,035 crore into African mines were neither found nor provided by the company as yet," it said.
The agency claimed that the company's "key business indicators" showed "significant" departures from normal commercial practices.
For instance, it said, the remuneration paid to senior management was "unusually low" compared to the scale of the company's operations.
The chief financial officer (CFO) has not received any salary since 2020, while the managing director was paid only about Rs 17,000 per month, despite the company reporting consolidated revenue of approximately Rs 7.7 lakh crore, the agency found.
It said the probe found "suspicious" block trades in the REL scrip executed by certain individuals whose names also appear in leaks released by the International Consortium of Investigative Journalists (ICIJ), indicating possible undisclosed offshore links that are under examination.
"Over Rs 600 crore were siphoned out of India through share manipulation using NRI benamidars," the ED alleged.
A benamidar is a person or entity in whose name a benami asset is transferred.
The ED also said in the statement that the company was found to be engaged in setting off trade payables and trade receivables from suspicious foreign parties based in the UAE and other overseas jurisdictions.
It added that a physical verification of stock carried out during the search revealed a "difference" of about 40 per cent between the stock recorded in the factory registers and the actual goods found at the premises.
The action by the central agency came against the backdrop of the SEBI's allegation of a massive financial fraud in Rajesh Exports.
The market regulator recently alleged that the company had a suspected consolidated revenue inflation of up to Rs 15.15 lakh crore for the 2020-21 to 2024-25 fiscal years.
