FEMA violations: GV Films’ theatre in Thanjavur seized by ED

CHENNAI: The Directorate of Enforcement has seized immovable property at Thanjavur valued at Rs 8.94 crore belonging to GV Films Limited, Chennai under the provisions of the Foreign Exchange Management Act (FEMA).

The property seized is a multi-screen theatre complex namely GV Complex at Thanjavur. GV Films was owned by the late G Venkatesan, brother of Mani Ratnam.

The seizure was made in connection with siphoning off foreign exchange in the guise of issuance of 6.4 million Global Depository Receipts (GDR) to the tune of Rs 345.6 crore.

The investigation by ED revealed that GV Films, to misuse the proceeds of Global Depository Receipts, opened a bank account in Banco Efisa S.A. (Bank), Lisbon, Portugal to handle the GDR proceeds. Further, they had conspired with Whiteview Trading Corporation, a British Virgin Island Company.

In line with conspiration, Whiteview entered into a ‘Credit Agreement’ with the Banco Bank and availed of a loan of $ 40 million to subscribe to the GDRs of G V Films Limited.

As a part of the conspiracy, the company entered into an ‘Account Charge’ Agreement with the Banco, the bank, and pledged entire GDR proceeds as collateral against the loan availed by Whiteview.

By availing loan, Whiteview Trading Corporation subscribed to the entire 6.4 million number of GDRs of G VFilms, and it pledged entire proceedings of $ 40 million against the loan availed by Whiteview Trading Corporation.

By doing so, G V Films Limited siphoned off $ 40 million equivalent to Rs 172.8 crore, which is supposed to be repatriated to India and utilised the same for the intended purpose as mentioned above.

Further, G V Films Limited, as a part of the pre-plan to siphon off forex, issued 16,00,00,000 nos. of underlying Equity Shares having the value of Rs 172.8 crore representing the said 6.4 million number of GDRs and the same were sold in the Indian market through the subscriber entities.