An investment fund registered in the Dutch Caribbean island of Curaçao has emerged as a common thread in at least four high-profile cases of allegedly fradulent financial transactions, including Nirav Modi’s, that are at the centre of investigations carried out by the Mumbai Police’s Economic Offences Wing (EOW), the Directorate of Revenue Intelligence (DRI) and the Enforcement Directorate (ED).
The Indian Express has learnt that the role of Curaçao-based Enterprise Emerging Markets Fund B.V. (EEMF), an open-ended investment vehicle controlled by Amicorp Group, a global corporate formation intermediary, has allegedly surfaced in the case of the Rs 13,400 crore fraud involving fraudulent letters of undertakings (LoUs) issued to Nirav Modi’s firms; the Rs 812 crore foreign currency convertible bonds (FCCB) fraud at Geodesic Ltd; the alleged Rs 2,600 crore overvaluation of power equipment imports by four Essar Group firms; and the alleged money laundering case involving Rajya Sabha member and politician Narayan Rane and Avighna Group.
EEMF is also at the centre of allegations against senior Malaysian government officials, who are said to have routed about $100 million through the fund to a third party in the 1Malaysia Development Berhad scam, according to submissions made in a Singapore court.
In the case of Nirav Modi, a few of his family-controlled offshore firms could have received LoU funds through EEMF for investing in Modi’s flagship firm Firestar International through the foreign direct investment (FDI) route. According to government FDI data, between April 2014 and September 2016, Firestar International received $17.71 million and $20.26 million from Forocom Worldwide Investment Ltd, Mauritius and Jade Bridge Holdings Ltd, Cyprus respectively.
Modi and his maternal uncle Mehul Choksi have come under the scanner of multiple agencies such as the CBI, ED, DRI and Income Tax department in connection with the allegedly fraudulent LoUs issued through PNB. Phone calls and text message to Modi’s lawyer Vijay Aggarwal did not elicit any response. A detailed email and phone calls to the Mumbai trustee of Amicorp Group did not elicit any response.
An EOW probe into the default of the Foreign Currency Convertible Bonds worth $125 million (approx Rs 812 crore) by Geodesic Ltd in 2013, has found that out of the total FCCB proceeds, at least $82.02 million was invested in EEMF by Geodesic’s wholly owned Hong Kong subsidiary, Geodesic Technology Solutions Limited, in 2010-2011.
According to the EOW chargesheet of April 2016, the ex-directors of Geodesic had “acquired shell companies” in tax haven jurisdictions and invested a portion of the net proceeds of the FCCB “through EEMF with the intent to siphon off the net proceeds and defraud the bondholders”.
The agency has alleged that the directors of Geodesic caused “wrongful gain for themselves and wrongful loss to the shareholders and the FCCB holders, siphoned off funds of the shareholders to the tune of Rs 250 crores by showing bogus purchases of software” by “creating a web of shell companies in various countries with the mala fide intention to siphon off the money through fictitious dealings”. The Bombay High Court has wound up Geodesic Ltd and asked multiple agencies to probe the directors of the firm.
EEMF, according to its website, is a limited liability company that is currently in the process of liquidation. The administrator of the fund is Amicorp Fund Services N.V.
According to sources, investment vehicles such as EEMF carry out transactions on behalf of the ultimate beneficial owner for a commission or transaction fee. This helps to keep the identity of the ultimate beneficial owner private.
In the case of the Essar Group firms, the DRI has alleged that Essar Global Limited, the holding company of Essar Group businesses, through a complex web of companies controlled Global Supplies (UAE) FZE, (GSF), an intermediary entity, “which raised invoices with inflated value” of imported capital goods on four Essar Group companies in India.
The 2015 show-cause notice of the DRI said Essar Group, which controlled GSF till March 2009, sold its entire stake in the company to Cyprus based “Seppest Holdings Ltd, a company owned by EEMF”. The DRI notice said that Amicorp Investment Limited, a limited liability company incorporated in Cyprus, had the “ultimate ownership” of the voting shares of EEMF.
The DRI notice said, despite questioning the officials of Amicorp, the firm did not disclose information on the ultimate beneficial owner of alleged shell firm Seppest Holding that’s controlled by EEMF.
In an email statement, the official spokesperson of Essar Group denied the DRI allegations on import of capital equipment. “All the procurements are from overseas suppliers and were made at arm’s length price which were not only at the lower quadrant compared to peer projects built in India but also certified to be reasonable by reputed technical consultants. The so-called margins or the excess payments… worked out by the DRI do not take into account all the costs incurred by the overseas supplier thereby resulting in highly inflated margins as against the normative net margins made by the supplier, thus leading to erroneous conclusions,” said the Essar Group spokesperson.
Sources told The Indian Express that EEMF has also been used to route money to offshore entities that have allegedly used the FDI route to invest that money in projects of Mumbai-based Avighna Group. The ED has conducted a preliminary enquiry into the alleged charges of money laundering against Avighna Group and entities allegedly connected to politician Narayan Rane.
Phone calls to Rane’s office and his personal assistant did not elicit any response.
“The allegations about a former Chief Minister investing funds in Avighna Group are absolutely baseless. Far from the former CM, no politician has ever invested a single rupee in Avighna Group at any point and our books clearly reflect this. Keen to get our name cleared, we ourselves approached the ED officials and showed them all the relevant papers, conclusively proving that there is not an iota of truth in the reported claims. The ED has accepted our submissions and a formal letter of closure of the case is awaited,” said Nishant Agarwal, managing director of Avighna Group.
According to the structured data released by International Consortium of Investigative journalists (ICIJ), various Amicorp Group firms have been named as “intermediary” for a dozen foreign firms that have been named in the Panama Papers and the Paradise Papers investigations.
In India, Amicorp has offices in Delhi, Mumbai and Bangalore. The Group’s registered firms include Amicorp Management India Pvt Ltd, Amicorp Advisory Services Pvt Ltd, Amicorp Consultancy Services Pvt Ltd, Amicorp Trustees (India) Pvt Ltd and Amicorp Enterprises Pvt Ltd.