The Adjudicating Authority under the Foreign Exchange Management Act (FEMA) has issued a show-cause notice to Sanjay Jhunjhunwala, promoter of the Mani Group of Kolkata, for alleged violation involving ₹206 crore.
Mr. Jhunjhunwala has been accused of trading illegally in foreign currencies in Singapore, going in for illegal external borrowings and maintaining foreign bank accounts without approval. The notice has been issued following a probe by the Enforcement Directorate, based on an overseas input received from the Financial Intelligence Unit.
Beneficial owner
The ED alleges that Mr. Jhunjhunwala was the beneficial owner of an account maintained with UBS, Singapore, in the name of Tiger Woods International, a company incorporated in the British Virgin Island.
“Investigation further revealed that he had purportedly entered into an un-incorporated Joint Venture Agreement with a foreign national for investing in projects in India (Information Technology/Information Technology Enabled Services project in Rajarhat New Town). However, no such project work was undertaken,” said the agency.
In the guise of the said agreement, the accused opened and operated a foreign bank account in the company’s name, of which he was the beneficial owner. “Although no investment was made by Mr. Jhunjhunwala and no business was conducted by the said joint venture, he clandestinely routed his ill-gotten money into India in the form of an arbitration award granted at Singapore,” the ED said.
Foreign account
The agency alleges that Mr. Jhunjhunwala also maintained an individual foreign account with LGT Bank (Singapore) Limited without authorisation and made transactions in foreign currencies by huge borrowings in foreign exchange.
“He took money outside India under the liberalised remittance scheme, which was also misused for such illegal speculative trading in various foreign currencies. For these transactions, he did not have any specific permission from the Reserve Bank of India. The money was brought back in the form of ‘unsecured loans’,” it is alleged.