GDR Scam: ED Attaches Movable and Immovable Properties Worth RS 59.37

The Enforcement Directorate (ED) on Friday attached movable and immovable properties worth Rs 59.37 crore belonging to London-based Arun Panchariya, Sanjay Aggarwal and India Focus Cardinal Fund in a GDR (Global Depository Receipts) scam under the provisions of the Prevention of Money Laundering Act (PMLA).

A GDR is defined as a negotiable financial instrument issued by a depository bank and it enables a company to reach investors in capital markets abroad.

The ED initiated the PMLA investigation on the basis of an FIR lodged by Telangana Police against Jalaj Batra, Sanjay Aggarwal, Arun Panchariya, Mukesh Chauradiya and others under various sections of the Indian Penal Code.

“The investigation revealed that Arun Panchariya, a person of Indian origin residing abroad, and entities connected to him, i.e., Pan Asia Advisors Limited (now known as Global Finance and Capital Limited), India Focus Cardinal Fund and Vintage FZE (now known as Alta Vista International FZE) along with his associates Sanjay Aggarwal, Jalaj Batra and others designed and executed a fraudulent GDR scheme in connivance with Morthala Sreenivas Reddy and Morthala Malla Reddy - the promoters/directors of Farmax India Ltd., to cheat and defraud the Indian investors,” an ED official said.

“When GDRs of an Indian company are subscribed abroad, the proceeds are mandated to be repatriated to India unless they are deposited abroad to meet future forex requirements,” the official said.

However, in the case of Farmax India Limited, despite any bonafide future forex requirements, GDR proceeds amounting to $71.91 million were not repatriated to India.

“GDR proceeds amounting to $56.57 million, which were received in Farmax India Ltd’s bank account in EURAM Bank, Austria, were pledged as security against the loan taken by the GDR subscriber -- Vintage FZE,” the official said.

“Further, the non-repatriated GDRs were transferred to India Focus Cardinal Fund which was controlled by Arun Panchariya. India Focus converted and sold the shares acquired from Vintage FZE in the Indian securities market and sale proceeds amounting to Rs 51.76 crore were kept with them,” the official added.