Under the terms of the Foreign Exchange Management Act (FEMA), 1999, the Directorate of Enforcement (ED) seized six immovable properties in Maharashtra and Karnataka worth INR 24.64 crore from M/s Venkateshwara Hatcheries Pvt. Ltd.
The ED launched an inquiry into the company’s illicit remittances to its Wholly Owned Subsidiary, M/s Venky’s London Limited, in Cardiff, UK, from 2010 until the present.
M/s Venkateshwara Hatcheries Pvt. Ltd (M/s VHPL) formed M/s Venky’s London Limited, Cardiff, UK (VLL) as its Wholly Subsidiary in the year 2010 in Cardiff, UK, according to an ED probe. M/s VHPL declared to the RBI that M/s VLL was engaged in Recreation activity by running a football club called Blackburn Rovers Football Club PLC (BRFC). Following the establishment of M/s VLL, M/s VHPL remitted substantial amounts in the form of stock injection. Apart from the initial investment, the corporation continued to infuse funds in the form of stock contributions for the day-to-day operation of the loss-making club without profiting from the investments.
According to an ED inquiry, M/s VHPL made remittances to M/s VLL totalling GBP 21,90,83,419 (INR 1963.60 Crore) since its inception until today. M/s Venkateshwara Hatcheries Pvt. Ltd diverted investment to the tune of GBP 33,78,378 to acquire 53,00,000 shares of M/s Hitlab Inc. Canada. Akon, an American singer, owns a portion of this Canadian company. According to reports, Akon performed at the private birthday party of one of M/s VHPL’s promoters, Sh. B Balaji Rao, in Pune.
An investigation revealed that M/s VHPL invested GBP 33,78,378 (INR 24,61,82,405/-) in an unconnected loss-making firm. It was produced with a bad aim because it contradicts their stated investment goal.
Multiple FEMA violations were observed in these trades. Aside from mis-declarations in the remittances, the company M/s Venkateshwara Hatcheries Pvt. Ltd (M/s VHPL) incorrectly declared these remittances as equity infusion in its wholly owned subsidiary, whereas the goal was to siphon off a large sum to an unconnected loss-making entity. Furthermore, the aforementioned investments were not declared to the RBI.
As a result, the equivalent value of properties held in India has been taken under the terms of FEMA Section 37A. More research is being conducted.
