JOIN USThe Directorate in its complaint filed before the Competent Adjudicating Authority for FEMA violations said it is also probing "suspected contravention" of forex rules in Virgin Mobile, a joint venture of Tata group.
The Adjudicating Authority in this case is a Special Director rank officer of the ED.
The ED has charged Shahid Balwa-promoted Swan Telecom, with committing FEMA contraventions to the tune of Rs 3,608 crore.
"This contravention was done by the company in issuing shares to foreign investor and resident investor under an agreement and had issued shares to foreign investor on an abnormal value to avoid the permission of FIPB (Foreign Investment Promotion Board), Government of India," the ED said in its complaint against Swan Telecom.
Swan Telecom Pvt Ltd issued 44.73 per cent shares to Dubai-based Etisalat and 5.27 per cent shares to Genex Exim as per agreement on September 23, 2009.
Swan Telecom while issuing shares to foreign investor under the agreement also allegedly contravened the provisions of the laid down rules prescribed by the Commerce and Industry Ministry by appointing a Director who had been nominated by Dubai-based Etisalat and arrangement of a steering committee having members of their foreign partner for functioning of Swan Telecom.
The ED also alleged that Swan Telecom had disclosed that issue of equity to Genex Exim was under resident category but during investigations it was found that "it was an indirect foreign investment in Swan because funds into Genex were brought from Dubai."
"Thus issue of equity on December 17, 2008 by Swan to Etisalat and Genex totalling 50 per cent under automatic route was in contravention" of various sections of FEMA "for the amount of Rs 3,608 crore", the ED alleged.
In the case of Loop Mobile India Limited based in Mumbai, the ED alleged FEMA contravention to a total amount of Rs 431 crore.
"These contraventions are done by the said company in not reporting the receipt of funds from abroad within the stipulated period of time to RBI, in not reporting issue of shares to foreign investor within stipulated period of time and in purchasing shares of an Indian company from the funds of Foreign Direct Investment," ED said in its complaint against the firm.
"The Directorate has also come across suspected contravention in Virgin Mobile (Tata group) and is analysing the pricing issue of shares between Unitech and Telenor," the ED said.
In its complaint against Loop Telecom, the ED has charged the firm with forex violations to the tune of Rs 184.28 crore.
"These contraventions are done by the said company in not reporting the receipt of funds from abroad within the stipulated period of time to RBI and in not reporting issue of shares to foreign investor within stipulated period of time," the ED said.
The least amount of FEMA contravention was found to be at Rs 96.60 lakh against S-Tel Private Limited based in Gurgaon after the ED investigation.
"This contravention is done by the said company in not refunding the balance of the FDI to foreign investor within stipulated period of time," the ED said in its submission against the firm.
The Directorate charged Chennai based Wellcom Communications India and Wellcom Communications for a total amount of Rs 11.87 crore in forex violations.
"These contraventions are done by the said company in not reporting the receipt of funds from abroad within stipulated period of time to RBI and in not refunding the balance of the FDI to foreign investor within stipulated period of time," the ED said in its complaint against the firm.
The Directorate is zeroing on the transactions made by these companies with legal entities based outside India to find out whether any guarantee/counter guarantee were given to obtain funds from abroad and the first source from where they originated, the ED said.
The ED, according to its submission, is also probing the source of funds, ownership of the companies based in foreign shores and end-use of foreign funds.
"For this (probe of sources of funds and ownership) letters have been issued to the source abroad based in 12 countries and Letters of Request have been sent to five countries for investigation outside India," the ED said.
Other aspects of the forex violations probe by the ED include "cash guarantee issue of Sistema" and the "issue of merger of companies after issue of licences."
According to ED sources, the penalty in such cases of FEMA contravention is usually three times of the amount involved.
The ED also submitted that its other angle of probe in the 2G spectrum allocation scam-- under anti-money laundering provisions-- are underway.
"Investigation under PMLA 2002, is under progress. Action would be taken against individuals and companies who have figured in the chargesheet filed by the CBI," the ED said.