The Enforcement Directorate (ED) has slapped a Rs 8,600-crore penalty notice against real estate group Emaar MGF land ltd for alleged violation of Forex laws.
In an investigation under the Foreign Exchange Management Act (FEMA) against Emaar MGF, the ED had noticed that funds to the tune of about Rs 8,600 crore were received by this company and its four subsidiaries from Dubai, Cyprus, Mauritius and other foreign countries under the foreign direct investment (FDI) scheme of the RBI since April 2005.
The scheme helps Indian companies to receive funds under automatic route from abroad for a number of business activities including Construction Development Projects.
Under this hassle-free facility, Emaar MGF land ltd and its subsidiaries were supposed to disclose the purpose (from the list of permitted activities by RBI) for which FDI was received.
“Emaar MGF and subsidiaries disclosed the use of FDI in construction development projects, but utilized the overseas funds in the purchase of agricultural and other land in India and thus have utilized the overseas funds in the business neither disclosed to the RBI nor permitted in the FDI scheme of the RBI,” the ED said in a statement.
Investigation under FEMA has revealed that foreign investments received by the companies were utilized in the purchase of agricultural land through various methods either directly or through other associated companies by diverting overseas funds to them, the agency said.
The ED has found that Emaar MGF land ltd. and it’s four subsidiaries violated the provisions of FEMA for an amount of about Rs 8,600 crore. Accordingly a Show Cause Notice to Emaar MGF land ltd. and its subsidiaries along with their responsible MD/Directors have been issued under FEMA.
