2nd set of ED notices are out, arms deals on the radar

In all, 17 persons and companies are named in the first show-cause notice, with violations of $2.1 million (Rs 9.6 crore) listed mainly against Congress MLA Arvind Khanna and a clutch of companies with which he is associated.

The ED’s action is significant since agency sleuths have a strong suspicion that unaccounted foreign exchange remittances traced will be well above Rs 50 crore and have been earned by the Khanna kin from their dealings in the arms and ammunition business.

It is to be recalled that following ED’s advisory, the Ministry of Defence last month blacklisted companies owned by the Khanna family and advised Government departments not to have official dealings with them.

The ED is now set to inform other investigating agencies of the Government — namely the Foreign Contribution Regulation Act, the Central Bureau of Investigation and the Income Tax Department — about the extent of alleged foreign exchange violations and the fact that the source of the funds remained unexplained.

The Indian Express has learnt that when ED sleuths travelled to London to unearth the source of the funds and the ownership of the dozens of off-shore companies run by the Khannas, they received copies of correspondence which categorize them as arms and ammunition dealers.

The show-cause notices state that between June 2000 and May 2004, huge transfers of foreign exchange were made from undisclosed sources to off-shore companies loacted in British tax havens and then via Swift transfers to companies owned by the family in New Delhi.

The ED’s notice lists the following as remitter companies: Westaway Trust Co Limited ($50,000), CI Law Trust Group ($ 335,000), Baccaro Holdings Incorporated ($ 630,537), Hezeldene Limited ($ 275,000), Tiffany International Limited ($80,000), Beryholme LImited ($ 150,000), Clariville Investments ($ 200,000), New Haven Nominees ($348, 375).

The complaint attached to the show-cause notice lists the statements and clarifications made by Vipin Khanna and Arvind Khanna, both of whom were unable to explain the original source of the remittances. While Arvind Khanna said the foreign exchane remittances were given to him as “gifts’’ by his father, Vipin Khanna said he routinely gave such gifts to his sons and was not aware of their “business interests.’’