The Enforcement Directorate (ED) imposed a penalty of Rs 1.86 crore for FEMA violations against a private firm currently under investigation by the Bengaluru Police for allegedly paying former Karnataka BJP minister G Janardhan Reddy Rs 20 crore to “end” an ED case registered against the firm in early 2018.
The ED penalty was levied even as the Bengaluru Police, probing a cheating case, found that the owners of Ambident Marketing Pvt Ltd, accused of duping hundreds by offering huge interest on deposits, transferred Rs 20 crore — Rs 18 crore in gold and Rs 2 crore in cash in 2018 — to Reddy to allegedly end ED investigations against it.
The ED’s Bangalore office, on the basis of information given by the Income Tax Department through a letter dated November 13, 2017, that Ambident Marketing Pvt Ltd was involved in forex trading, conducted searches at locations linked to the firm on January 4 and 5, 2018, the ED has stated.
“Several FEMA violations like forex trading to the extent of $66,214, the opening of accounts abroad by a resident Indian without the permission of RBI and incorporation of a firm in Dubai without prior approval of the RBI came to the fore during the investigations in the matter,” the ED stated in response to CCB claims that Ambident approached Reddy to sort its ED case.
Based on a complaint filed on February 2, 2018, “the matter was adjudicated by the Joint Director and penalty to the tune of Rs 1.86 crores was recovered. The cash in INR to the tune of Rs 1.97 crores recovered during the search was confiscated under Section 13(2) of the FEMA,” the ED said.
The ED probe into Ambident Marketing revealed that the company received a total investment of Rs 954 crore from depositors under various schemes since its inception on December 20, 2016. “ED has written to the RBI to have a relook into the matter and protect the interest of the investors/depositors at large who are being duped in the name of Islamic banking/halal investment,” the ED said on November 8 in an official statement.
Former BJP minister Janardhan Reddy was under the ED’s scanner between 2012 and 2017 when the agency ordered the confiscation of assets worth Rs 884 crore for money laundering from illegal mining. The Karnataka High Court, however, quashed the ED’s case on technical grounds in March 2017.
The ED’s statement about its case against Ambident Marketing Ltd came after Bengaluru Police Commissioner T Suneel Kumar said on November 7 that Reddy had gone missing even as the CCB police in the city were trying to find and question him on his association with Ambident and CCB findings that Reddy was paid Rs 20 crore to dodge the ED case.
Reddy surfaced Saturday in response to a Bengaluru Police Central Crime Branch (CCB) notice and subjected himself to questioning by senior officers at the CCB office. Ahead of the visit to the CCB office with his lawyers, Reddy issued a statement saying he is not linked to Ambident Marketing Pvt Ltd and that his lawyers advised him “to await a CCB notice” before presenting himself for questioning.
The CCB police stumbled on Reddy’s role while probing a May 29, 2018, cheating case against Ambident Marketing Pvt Ltd in Bengaluru for defrauding scores of people of their deposits after promising up to 40 per cent interest on investments, Bengaluru police commissioner T Suneel Kumar said.
Police investigations into Ambident’s activities have revealed that its owner Syed Ahmed Fareed cheated over 15,000 people to the tune of over Rs 600 crore. The CCB has allegedly found pictures of a meeting that Fareed held with Reddy in a hotel in Bengaluru in March this year.
Inquiries with Fareed, and his son Afaq, who was also at the meeting, revealed that Reddy’s help had been sought by the promoters of Ambident to allegedly end investigations launched by the ED. According to the CCB’s findings, Reddy sought Rs 20 crore in the form of gold to help Fareed.
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The CCB probe has so far found that Fareed approached Reddy through two intermediaries — Mehfuz Ali Khan, a former personal assistant to Reddy, who is also accused of illegal mining, and Brijesh Reddy, a contractor known to Fareed.
Based on their negotiations Fareed is alleged to have transferred Rs 18 crore to a jewellery firm in Bengaluru called Ambika Jewels Corporation for the purchase of 57 kg of gold. He also allegedly paid Reddy Rs 2 crore in cash.
The gold was then allegedly shifted from Bengaluru to Bellary by Ali Khan and was parked with a Bellary jeweller Ramesh K of Rajmahal Fancy Jewellers who is associated with Reddy. The CCB claims to have found receipts for the gold purchased from Ambika Jewels Corporation by Fareed but has not been able to find the 57 kg of gold moved to Bellary by Ali Khan despite arresting the Bellary jeweller Ramesh several days ago.
Reddy and Khan, who allegedly played key roles in the disappearance of the Rs 20 crore worth of gold and cash went underground when they got wind of the probe following the jeweller’s arrest several days ago, claimed CCB officials.
“The probe was delayed on account of the Lok Sabha bypoll in Bellary at the instance of the Chief Minister who said it would affect the polls,” a prosecutor in the case said.
On November 5, a day before the Lok Sabha poll results, Reddy’s aide Khan obtained anticipatory bail in connection with the Ambident Marketing Pvt Ltd cheating case. On Friday, Janardhan Reddy filed three different petitions to counter the CCB.
Reddy filed an anticipatory bail plea in a sessions court seeking bail on the ground that the other accused in the cheating case — Fareed, Afaq, the jeweller Ramesh, and Ali Khan — had all been granted bail. He also approached the Karnataka High Court with a regular bail plea and filed a writ petition against the Bengaluru Police Commissioner and CCB officials over the police probe.
In the bail plea in the HC, Reddy and Khan have stated that they were not connected in any way with the activities of Ambident Marketing Pvt Ltd and that they had been dragged into the investigations with a political agenda. The pleas are expected to be taken up on Monday.