Fourteen months after the Panama Papers probe in April 2016, the first case of substantial seizures has been effected by the Enforcement Directorate (ED) which issued orders for freezing Rs 7-crore worth of movable assets of Delhi-based jeweller Ashwani Kumar Mehra and members of his family.
ED officials told The Indian Express that more such seizures linked to the Panama Papers investigation — an expose of off-shore companies by the International Consortium of Investigative Journalism-Suddeutsche Zeitung and The Indian Express — are in the offing and members of the Mehra family had admitted to alleged violations under the Liberalised Remittance Scheme (LRS).
The Mehrasons case is among the 49 routed to ED by the Central Board of Direct Taxes (CBDT) in the wake of the Panama Papers probe and the agency has alleged that the LRS route was misused by the Mehras by converting remittances into interest-free loans to companies located in British Virgin Islands and, from there, to a company in the UAE also linked to them.”
An estimated Rs 10.54 crore is still illegally parked outside India by the said persons, the ED press release stated. Leaked records of Mossack Fonseca had shown that since the year 1999, Ashwani Kumar Mehra and members of his family had registered seven off-shore firms in the BVI and Bahamas with the flagship company, PTC Group Limited, being nominated as either secretary or shareholder in the other companies.
Some offshore entities linked to the family — their registration documents, shareholding certificates and resolutions form part of the leaked records — are Maxhill Holdings Ltd, Univi Corporate Limited, AEH Services Ltd and Stonebay International Limited.
Data shows that in several of these companies incorporated by Mossack Fonseca, there was a fresh allotment of shares and, therefore, enhanced holdings among members of the Mehra family, first in 2011, then 2013 and, finally, March 2015.
For instance, in Maxhill Holdings Limited, the authorized capital of the company was increased from $50,000 to $200,000 in March 2015. Also, closer to the allegations made now by the ED, other documents show that for Stonebay International Limited, a resolution was passed on March 4, 2014 allowing the company to borrow funds from Maxhill Holdings Ltd and permit the shareholders to repay earlier loans.
It is this intra-company rotation of money and grant of interest-free loans to members of the family which ED has listed as an alleged violation of regulations and recorded its first seizure under the amended Section 37 A (1)of the Foreign Exchange Management Act.
The amendment stipulated that in case of a violation, property of an equivalent value could be seized by the agency. In this case, assets of the business group to the tune of Rs 7 crore will be seized from bank accounts.