In a GDR (Global Depositary Receipts) scam involving M/s Farmax India Ltd., Hyderabad, the Directorate of Enforcement (ED) has attached real estate worth Rs. 59.37 crores that belonged to Arun Panchariya, Sanjay Aggarwal, and M/s India Focus Cardinal Fund in accordance with the Prevention of Money Laundering Act, 2002 (PMLA).
On the basis of the Telangana Police FIR, which accused Jalaj Batra, Sanjay Aggarwal, Arun Panchariya, Mukesh Chauradiya, and others of violating various provisions of the Indian Penal Code, 1860, ED launched the PMLA probe.
Arun Panchariya, an Indian national living abroad, and companies linked to him, including Pan Asia Advisors Limited (now known as Global Finance and Capital Limited), India Focus Cardinal Fund, and Vintage FZE (now known as Alta Vista International FZE), along with his associates Sanjay Aggarwal, Jalaj Batra, and others, created and carried out a fraudulent GDR scheme with the help of Morthala Sreenivas Reddy and Morthala Malla Reddy – the Promoters / Directors of Farmax India Ltd., to cheat & defraud the Indian investors.
When an Indian company’s GDRs are purchased overseas, the proceeds must be returned to India unless they are placed there in order to satisfy future foreign exchange needs. However, in the instance of Farmax India Limited, GDR earnings totalling USD 71.91 million (equivalent to Rs. 318 Crore at the time of issuing GDRs in June and August 2010) were not repatriated to India despite any genuine future forex requirements. The USD 56.57 million in GDR profits that were deposited into Farmax India Ltd.’s account at EURAM Bank in Austria were given as collateral for the loan that GDR subscriber M/s Vintage FZE took out.
Additionally, the non-repatriated GDRs were transferred to Arun Panchariya-controlled M/s India Focus Cardinal Fund. The shares that M/s India Focus Cardinal Fund purchased from M/s Vintage FZE were converted and sold on the Indian securities market, and the selling profits totalling Rs. 51.76 Crore were retained by them. Additional investigation is being conducted.
