The Enforcement Directorate has charged five telecom firms for alleged violation of the Foreign Exchange Management Act, involving Rs. 4,300 crore in the 2G spectrum case. The complaints were filed by the investigating officer under Section 16 (3) of the FEMA, 1999 before the Competent Adjudicating Authority, ED sources said.
The complaints have named Swan Telecom Private Ltd; Loop Mobile India Ltd, Mumbai; Loop Telecom Ltd, New Delhi; S. Tel Private Ltd, Gurgaon; and Wellcom Communications India Private Ltd., Chennai.
The ED action came a day after the Supreme Court, monitoring the 2G scam probe, observed that there must be quick progress with the trial.
The ED has also come across “suspected contravention in Virgin Mobile (Tata Group)” and is analysing the pricing issue of shares between Unitech and Telenor. The complaint said the cash guarantee issue of Sistema, as also merger of companies after the grant of licences, was being probed.
The Directorate is trying to find out the source of funds in the companies based abroad and who owns these firms. Besides, Letters of Request have been sent to five countries for investigation outside India, according to the complaint.
The ED found fault with Swan Telecom for contravention of the FEMA provisions, for a total of Rs. 3,608 crore, in issuing shares to a foreign investor and a resident investor under an agreement. The company had issued shares to the foreign investor on an abnormal value to avoid taking permission from the Foreign Investment Promotion Board. Swan Telecom issued shares to Etisalat, Dubai, and Genex Exim as per the 2008 agreement, giving Etisalat, Mauritius, 44.73 per cent and Genex Exim 5.27 per cent. Swan Telecom disclosed that issue of equity to Genex Exim was under the resident category but it was an indirect foreign investment in Swan Telecom because funds into Genex Exim were brought from Dubai through an intermediary.
The ED accused Loop Mobile India Ltd., Mumbai, of contravening the FEMA provisions to the tune of Rs. 431 crore, and Loop Telecom Ltd., New Delhi, of infringing the Act to the tune of Rs.184.28 crore. S Tel Pvt. Ltd, Gurgaon was accused of violating the FEMA to the tune of Rs. 96.60 lakh, and Wellcom Communications was held responsible for contravening the FEMA provisions, the amount involved being Rs.11.87 crore.
The complaint said such contraventions were indulged in by the companies, not reporting to the Reserve Bank of India the receipt of funds from abroad within the stipulated period and not refunding the balance of the FDI (Foreign Direct Investment) to the foreign investor before the deadline. Under Section 13 of the FEMA, penalty in such cases may be up to three times the sum involved in such contraventions or up to Rs.2 lakh where the amount of violation is not quantifiable.