ED searches at OPG group premises; seizes Rs 8.38 crore

CHENNAI: After a two-day raid, ED seized Rs 8.38 crore from the office premises of the OPG group and its directors' residential premises.

The sleuths from the Directorate of Enforcement (ED), Chennai, conducted search operations on Monday and Tuesday on the premises of the OPG Group, Chennai, for alleged violations of the Foreign Exchange Management Act (FEMA) and Foreign Direct Investment (FDI) regulations.

The OPG Group, controlled by Arvind Gupta, is in manufacturing and power generation businesses.

The company had received Foreign Direct Investments (FDI) to the tune of Rs 1,148 crore from Seychelles-based companies set up by family members of Arvind Gupta for use in the power sector. However, investigations have revealed that the funds were misused, and multiple violations of FEMA provisions have come to light including misdeclaration to the RBI.

The ED probe revealed that a significant portion of the said FDI funds intended for investments in the power sector, subject to certain conditions under the FDI policy, was illegally routed into the stock market, including investments in mutual funds and was also invested in land and real estate, which is strictly prohibited under FDI guidelines. Further, a substantial amount was converted into cash with the assistance of vendor companies, which have facilitated the issuance of fake invoices, enabling the group to withdraw funds in the form of physical currency. During the search, ED also recovered handwritten notes related to the generation and utilisation of the cash, according to a press release from ED.

"Further search revealed that the management of the OPG Group had set up several overseas joint ventures and companies in Dubai, Isle of Man, Seychelles, Singapore, and Hong Kong, through which a significant portion of the diverted funds was allegedly parked abroad. These foreign entities are under investigation to determine the full extent of the financial flow and whether these funds were used for money laundering or other illicit activities," an ED note read.