New Delhi, Oct 3 The Enforcement Directorate (ED) on Monday arrested one Sanjay Raghunath Aggarwal in connection with a money laundering case related to GDR (Global Depository Receipt fraud.
According to a central agency official, they initiated the case on the basis of an FIR registered by Telangana Police in the case of fraudulent GDR (Global Depository Receipt) issue of a Hyderabad based firm Farmax India Ltd.
The official said that Aggarwal, along with the promoters of the GDR issuing Company and others, curated a scheme of duping the Indian investors by fraudulently subscribing to the GDR of Indian companies from loan obtained from EURAM Bank by pledging the proceeds from the same GDR issue.
Farmax India Ltd, with the financial advisory services of Aggarwal through his entity La Richesse Advisors Pvt. Ltd, had raised Rs 318 crore in June-August 2010, in Europe by issuing GDR.
The entire GDR was subscribed by only one entity Vintage FZE floated and controlled by Arun Pachariya out of loan funds taken from EURAM Bank by pledging the GDR proceeds of the Indian Company, even before the GDRs were subscribed.
The Indian Company in connivance with Aggarwal and Pachariya and others fraudulently offered the GDR proceeds as mortgage security to the Bank to arrange loan to Vintage FZE.
Eventually, Vintage FZE did not repay the loan and the GDR proceeds were adjusted by the Bank against outstanding loan.
The GDR proceeds were never repatriated to India. These GDRs were later converted into equity by the FIIs controlled by Pachariya and sold in Indian Stock market at higher inflated price and caused a loss to Indian investors of around Rs 54 crore.
Aggarwal was produced before court which remanded him to judicial custody for 14 days.
Further investigation in the matter is on.
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