ED Uncovers Massive Share Transfer Fraud, Imposes Penalties Exceeding ₹566 Crore
(Judicial Quest News Network)
The Enforcement Directorate (ED) Chennai Zonal Office has conducted a thorough investigation under the Foreign Exchange Management Act (FEMA), 1973, targeting M/s. GI Retail Pvt. Ltd. and associated entities. The investigation revealed a complex scheme involving the questionable transfer of shares from the Indian company M/s. Hermes I Ticket Pvt. Ltd. (owned by GI Retail Pvt. Ltd.) to a Mauritius-based fund, Emerging Markets Investment Fund (EMIF) 1A.
Shockingly, just weeks later, these shares were transferred again to the German entity M/s. Wirecard AG at a significantly inflated price. The ED determined that the entire transaction was meticulously orchestrated to disguise the fact that M/s. Wirecard AG had intended to purchase the shares at a predetermined price all along.
Further scrutiny unveiled that the transactions involving EMIF 1A were merely a facade, enabling the delinquent shareholders of GI Retail to hide the substantial sum of ₹195 Crore (approximately) outside India. This excess amount was funnelled into the accounts of two UAE-based entities—controlled indirectly by the Indian beneficiaries—under the pretence of fictitious services.
Having identified significant foreign exchange holdings that were not repatriated to India, the ED invoked Section 37A of FEMA, seizing various assets belonging to the perpetrators in India valued at around ₹195 Crore. Following due legal process, an Adjudication Order dated October 28, 2024, resulted in a total penalty of ₹566.5 Crore (approximately) imposed on the involved parties, along with the confiscation of their properties worth ₹195 Crore.
