The Enforcement Directorate has attached assets valued at ₹59.37 crore in connection with an alleged Global Depository Receipt (GDR) scam that pertains to Hyderabad-based Farmax India Limited.
The properties allegedly belong to Arun Panchariya, Sanjay Aggarwal and India Focus Cardinal Fund. The agency has taken action on the basis of a police case against accused Jalaj Batra, Sanjay Aggarwal, Arun Panchariya, Mukesh Chauradiya and others, it said.
According to the ED, Mr. Panchariya is a person of Indian origin residing abroad. It has identified the entities connected to him as Pan Asia Advisors Limited (now known as Global Finance and Capital Limited), India Focus Cardinal Fund, and Vintage FZE (“Vintage” - now known as Alta Vista International FZE).
The agency alleges that he along with his associates, including Mr. Aggarwal and Mr. Batra, planned and executed a fraudulent GDR scheme in connivance with Morthala Sreenivas Reddy and Morthala Malla Reddy, promoters/directors of Farmax India Limited, to cheat Indian investors.
When GDRs of an Indian company are subscribed abroad, the proceeds are mandated to be repatriated to India if they are not deposited overseas to meet future forex requirements. In this case, GDR proceeds amounting to $71.91 million (equivalent to ₹318 crore in June and August 2010) were not repatriated to India.
About $56.57 million, which was received in Farmax India Limited’s bank account in EURAM Bank, Austria, was pledged as security against a loan taken by the GDR subscriber, Vintage FZE.
“Further, the non-repatriated GDRs were transferred to India Focus Cardinal Fund which was controlled by Arun Panchariya. India Focus Cardinal Fund converted and sold the shares acquired from Vintage FZE in the Indian securities market and sale proceeds amounting to ₹51.76 crore were kept with them,” the agency alleged.
