LI Network
Published on: October 10, 2023 at 12:04 IST
The Enforcement Directorate (ED) announced on Monday that it has issued a fresh order to seize assets valued at more than Rs 24 crore belonging to the prominent hatchery company, Venkateshwara Hatcheries Pvt Ltd.
This action is part of an ongoing investigation into alleged violations of foreign exchange laws by the company. In a statement, the federal agency revealed that it has seized six immovable properties located in Maharashtra and Karnataka under the provisions of the Foreign Exchange Management Act (FEMA).
The total estimated value of these seized assets is Rs 24.64 crore.
The ED’s probe is linked to “illegal remittances made by the company since 2010 to its wholly-owned subsidiary, Venky’s London Limited, Cardiff, UK.”
Last month, the agency had similarly seized assets worth Rs 65 crore in connection with this case.
According to the ED, Venkateshwara Hatcheries Pvt. Ltd. (VHPL) established Venky’s London Limited, Cardiff, UK (VLL) as its wholly-owned subsidiary in 2010 in Cardiff, UK. VHPL declared to the Reserve Bank of India (RBI) that VLL’s business was engaged in recreational activities, specifically running a football club named Blackburn Rovers Football Club PLC (BRFC).
The ED alleged that after incorporating VLL, VHPL remitted substantial funds in the guise of equity infusion. Apart from the initial investment, the company continued to inject money in the form of equity contributions for the day-to-day maintenance of the loss-making club without generating any profits from these investments.
VHPL made remittances amounting to GBP 21,90,83,419 (equivalent to INR 1,963.60 crore) to VLL since its incorporation until the present date, according to the ED.
Out of these investments, VHPL diverted GBP 33,78,378 to acquire 53,00,000 shares of a company named M/s Hitlab Inc. Canada. This Canadian entity is partially owned by American singer Akon, who reportedly performed at the private birthday party of one of VHPL’s promoters, B Balaji Rao, in Pune.
The ED’s investigation found that VHPL’s investment of GBP 33,78,378 (equivalent to Rs 24,61,82,405) in an unrelated loss-making entity was made with a non-bona fide intention, contrary to their own declared purpose of investment. The agency identified multiple FEMA contraventions in these transactions.
Furthermore, VHPL falsely claimed these remittances as equity infusion in its wholly-owned subsidiary. In reality, the intention behind these actions was to divert a substantial amount to an unrelated loss-making entity, the ED alleged.
These investments were not reported to the RBI, leading to the seizure of the equivalent value of properties held in India under the provisions of Section 37A of FEMA, as per the agency’s statement.