This excess amount of Rs 195 crore was held in the accounts of two UAE-based entities, which are indirectly controlled by Indian beneficiaries.
The Enforcement Directorate announced on Friday that it has imposed a penalty of Rs 566.5 crore on Chennai-based GI Retail Pvt Ltd and confiscated properties worth Rs 195 crore due to violations of the Foreign Exchange Management Act (FEMA). This action is linked to the transfer of shares of an entity owned by GI Retail through a Mauritius-based firm.
The ED’s measures follow an adjudication order issued on October 28, stemming from its investigation into the sale of Hermes I Ticket Pvt Ltd (owned by GI Retail) to the Mauritius-based Emerging Markets Investment Fund (EMIF), which subsequently transferred the shares to the German financial services company Wirecard at an inflated price.
An official statement revealed that the entire transaction appeared to be fraudulent, designed to hide the fact that the shares of Hermes I Ticket were always intended to be purchased by Wirecard at a predetermined price. The investigation found that the transactions involving EMIF 1A were merely a means for delinquent shareholders of GI Retail to retain and conceal a substantial portion of the actual sale price—approximately Rs 195 crore—outside of India.
This excess amount was deposited in the accounts of two UAE-based entities, which are indirectly controlled by Indian beneficiaries, under the pretense of fictitious services. After determining that these beneficiaries had acquired significant foreign exchange without repatriating it to India, the ED invoked provisions of Section 37A of FEMA to seize various equivalent properties in India amounting to Rs 195 crore.