Tags:
Journalism of Courage
The enforcement directorate (ED) has sent a notice to Dubai-based real estate company Emaar for an alleged foreign exchange violation of approximately Rs 8,600 crore in its investments in MGF Development Ltd in India.
The ED probe points out that the Emaars investments in India were done through foreign direct investment (FDI) route and the funds were used to buy agricultural land,which is not permitted under the FDI rules. According to the rules,the adjudicating officer of ED could slap a penalty of up to three times the violation.
Emaar MGF Land Ltd is a joint venture between Emaar and MGF Development Ltd.
The investment first came under the scanner in 2010. The investments were brought in through the automatic route,which means the company could bring in investment by merely disclosing its purpose to the Reserve Bank of India in sectors that have been identified by the central bank.
Emaar brought investment to India by disclosing that it was for construction purposes,allowed under automatic route.
However,the ED found that the firm used the funds to buy agricultural land. This,the ED says,is a violation of RBI norms and foreign exchange rules.
The ED in an investigation,under Foreign Exchange Management Act,in the case of Emaar MGF Land Ltd has noticed that funds were received by the company and its four subsidiaries from Dubai,Cyprus,Mauritius and other countries under the FDI scheme since April 2005 which amounted to approximately Rs 8,600 crore.
The ED notice said,The scheme of RBI has given facility to Indian companies under automatic route to receive funds from abroad for a number of business activities including the Construction Development Projects. In this hassle free facility,M/s Emaar MGF Land Ltd and its subsidiaries had to disclose the purpose(from the list of permitted activities by RBI) for which FDI was received.
This company and subsidiaries disclosed the use of FDI in construction development projects,but utilised the overseas funds in the purchase of agricultural land/lands in India and thus have utilised the overseas funds in the business neither disclosed to RBI nor permitted in the FDI scheme.
When contacted,a spokesperson for Emaar MGF said the company is yet to receive any notice from the ED. We have not received any communication from the government authorities and hence we are not in a position to comment. We emphasise that the company continues to uphold the highest standards of corporate governance and follows the laws of the land.
