ED searches cos for forex violations, money laundering

Mumbai: The Enforcement Directorate (ED) Friday conducted searches at half a dozen firms for alleged forex violations and money laundering. Official sources told ET that these firms were also investigated earlier by the Securities and Exchange Board of India (Sebi) for breach of securities market laws. “Based on the information shared by Sebi, the searches over alleged irregularities under forex rules and money laundering were conducted. The promoters of these firms have been summoned and they will be quizzed in due course,” said a senior official privy to the investigations.

Among those searched include K Sera Sera, Zenith Infotech, Kolar Biotech, Sharepro Services India, Mystic Electronics and Asian Granito India. Spokespersons at these companies were not immediately available for comment.

Earlier this week, Anil Ambani and his wife Tina were quizzed by the ED in a forex rules violation case. The agency is learnt to be probing transactions with alleged related offshore companies that invested in Anil Ambani-promoted Indian firms through FDI. The ED is investigating the veracity of these investments. Ahead of the meeting of the global task force focused on stopping money laundering, the ED has stepped up its investigations.

FATF Summit
“There has been a lot of exchange of data between the federal agencies in the run up to the all-important meet that is likely to take place in November.,” explained another source. The cases by ED will put forth the country’s intention to prosecute those invoked in laundering, round tripping and siphoning of fundsOn September 15, 2006, Zenith Infotech (ZIL) offered $33 million 3.0% convertible bonds due for repayment in August 2011. Subsequently, on August 14, 2007, ZIL offered $50 million 3.0% convertible bonds due for redemption in August 2012. The two series of FCCBs (foreign currency convertible bonds) issued by ZIL had terms of cross default stipulating that default in redemption of FCCBs due in August 2011 would automatically cause a cross default on ZIL’s obligation on other series of FCCBs due for redemption in August 2012. On October 13,2011, ZIL informed stock exchanges that it was in negotiations with the FCCB holders to extend the time for redemption of FCCBs while the trustees on behalf of the FCCB holders filed a suit against ZIL for recovery on October 21, 2011.