ED slaps biggest ever FEMA show-cause notice of Rs 7,220 cr on Ganesh Jewellers

NEW DELHI: The Enforcement Directorate (ED) has slapped its biggest ever FEMA show cause notice of Rs 7,220 crore on Kolkata-based Shree Ganesh Jewellery House (I) Ltd for allegedly indulging in illegal foreign exchange abroad, officials here said on Monday, adding that it is linked to a bank fraud case.

In what had turned out to be a largely controversial case, with allegations of top officials in various probe agencies being complicit flying around, the Enforcement Directorate had also registered a money laundering case against the jewllers in a bank fraud case of over Rs 2,600 crore where a 25-bank consortium led by the SBI was cheated, in which an attachment order of Rs 175 crore was also issued last year.

However, highly-placed sources told Millennium Post that Ganesh Jewellers had managed to get a court order against coercive action in that case and since then the financial probe agency has been finding other ways to prosecute the company. “It took us more than a year to finally be able to gather enough materials to issue this showcause notice,” said a top official, who added that the lockdown provided investigators with the perfect opportunity to read up and gather evidence in the case without distractions.

A source in the agency said that getting started on the bank fraud case was also extremely challenging for officials. He said that the banks were steadfastly against reporting Ganesh Jewellers default of Rs 2,672 crore as a fraud and had even written to the agency, saying that it was just a default amount.

The ED said the firm is among the top 100 wilful bank loan defaulters of the country, as per the Reserve Bank of India (RBI), and its three promoter brothers - Nilesh Parekh, Umesh Parekh and Kamlesh Parekh - are also being probed the Central Bureau of Investigation (CBI) and the Directorate of Revenue Intelligence (DRI). Nilesh was arrested by the DRI in 2018.

Continued from p1 Despite the bank fraud case against the company, the CBI is yet to file a chargesheet, thereby leaving a window open for the adjudicating authority of ED in the case - D Sanghi - to stay the attachment order in the case. Mysteriously, a letter of request against the firm and its promoters issued by the ED is “pending” before the federal enforcement agency of Switzerland, the sources said. Moreover, the choice of prosecutors for the case against Ganesh jewellers has also raised eyebrows.

In cases of a similar nature where the exporter and importer are related parties, banks have for years together funded these dubious transactions. For instance, in the case of Winsome Diamonds - linked to the brother of an influential businessman, which is also being probed in as many as 15 bank fraud cases. Curiously, the conspicuous silence over Winsome promoter Jatin Mehta's escape to Saint Kitts and Nevis - which does not have an extradition agreement with India.

The company and its promoters, as per the ED, have been charged under the FEMA “for resorting to unauthorised foreign exchange dealings, holding of foreign exchange outside India and willful siphoning off a whopping Rs 7,220 crore as export proceeds.”

The ED in its probe found that the company, Shree Ganesh Jewellery House (I) Ltd, “has huge outstanding for foreign bills drawn on Al Marhaba Trading FZC, Sparkle Jewellery LLC, UAE and Astha Jewellery LLC, UAE which are self-promoted companies”.