The Enforcement Directorate has seized an additional amount of Rs 131.11 crore lying in bank accounts and virtual accounts belonging to the Chinese national-owned non-banking financial company (NBFC)-PC Financial Services Pvt Ltd - under the provisions of the Foreign Exchange Management Act, 1999 (FEMA) on Thursday.
This is in continuation of earlier seizure order dated August 26 whereby an amount of Rs 106.93 crore was seized, said the ED.
During the course of the money-laundering investigation, ED also initiated an investigation under FEMA against PC Financial Services Pvt Ltd, a Non-Banking Financial Corporation company, that provides instant personal microloans through its mobile application 'Cashbean' for suspicious foreign outward remittances.
"PC Financial Services is a wholly-owned subsidiary (WOS) of Oplay Digital Services, SA de CV, Mexico, which is, in turn, a WOS of Tenspot Pesa Limited, Hong Kong which is owned by Opera Limited (Cayman Islands) and Wisdom Connection I Holding Inc (Cayman Islands), which is ultimately beneficially owned by Chinese National Zhou Yahui," the ED said.
The original Indian company PC Financial Services was incorporated in 1995 by Indian nationals and got NBFC license in 2002 and after Reserve Bank of India approval in 2018, the owners moved to the Chinese controlled company.
The investigation further revealed that the foreign parent companies of PC Financial Services brought Foreign Direct Investment worth Rs 173 crore for lending business and within a short span of time, made foreign outward remittances worth Rs 429.29 crore in the name of payments for software services received from related foreign companies, the ED said.
PC Financial Services, the federal agency also showed a high domestic expenditure of Rs 941 crore and said, "Detailed investigation into the foreign expenses paid by the NBFC revealed that most of the payments were made to foreign companies, which are related and owned by the same Chinese Nationals, who own the Opera Group."
ED has found that exorbitant payments were blindly allowed by the dummy Indian Directors of PC Financial Services without any due diligence and on the instructions of the Country Head Zhang Hong, who directly reported to Zhou Yahui, a resident of China.
"PC Financial Services remitted forex worth Rs 429 crore to 13 foreign companies located in Hongkong, China, Taiwan, USA and Singapore in the guise of payments for the License fee for Cash Bean Mobile APP (Rs 245 crore per annum), Software technical fee (of around Rs 110 crore), online marketing & advertisement fee (of around Rs 66 Crore).
"All these services and applications are available in India at a fraction of the cost incurred by PC Financial Services. Moreover, all the clientele of the NBFC was in India, despite that huge payments were made abroad and no proof of receipt of service is there," said the agency.
Simultaneously, the ED said, during the same period of time, PC Financial Services also booked domestic expenditure of a similar amount under the same heads of expenditure.
As per the agency, PC Financial Services management failed to give any justification for these expenses and admitted that "All remittances were done to move money out of India and to park it abroad in the accounts of Group Companies controlled by the Chinese promoter".
Hence, PC Financial Services has illegally remitted huge funds outside India in the guise of imports of non-existent software and marketing services to park the funds abroad and hold them in the accounts of related foreign companies, said the ED, adding the firm has contravened provisions of FEMA, 1999.
ED had earlier issued seizure orders for amounts worth Rs 106.93 crore. An amount of around Rs 90 crore has already been realized into the accounts of ED.
"Now ED has issued a second seizure order for an amount of Rs 131,11,61,544 lying in its various Bank accounts and Payment gateway accounts. This will take the total seizure in this case to around Rs 238 crore."
( With inputs from ANI )
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