ED Uncovers Extensive Violations at Rajesh Exports
The Enforcement Directorate (ED) has disclosed a series of significant findings following search and seizure operations at nine locations linked to Rajesh Exports Ltd (REL) in Bengaluru and Mumbai. The investigations, conducted under the Foreign Exchange Management Act (FEMA), 1999, have brought to light several alleged irregularities, leading to a 5 percent lower circuit limit hit for the company's shares.
Missing Investment Records Flagged
A primary concern raised by the ED is the non-availability of crucial documentation related to Rajesh Exports' foreign transactions. The agency stated that the company failed to provide records for imports, exports, overseas investments, and the settlement of foreign trade receivables and payables. Specifically, records supporting a claimed investment of Rs 1,035 crore in African mines were neither found nor provided during the search operations.
Significant Stock Discrepancy Found
During the physical verification process, investigators uncovered a substantial mismatch between the company's recorded inventory and the actual physical stock. The ED reported an approximately 40% difference, indicating a significant discrepancy in the stock reflected in factory registers versus what was available on the premises.
Opaque Foreign Transactions Under Scrutiny
The probe also flagged opaque netting or set-offs of foreign trade receivables against trade payables, amounting to around Rs 3,000 crore. The agency suspects that Rajesh Exports engaged in these set-offs with "suspicious foreign parties" based in the UAE and other overseas jurisdictions, making these transactions a key area of ongoing examination.
Unusual Executive Compensation Patterns
The ED's investigation extended to the remuneration patterns of key management personnel, noting departures from normal commercial practices. It was revealed that the Chief Financial Officer had not received any salary since 2020. Furthermore, the Managing Director was reportedly paid only about Rs 17,000 per month, despite Rajesh Exports reporting consolidated revenue of nearly Rs 7.7 lakh crore.
Suspicious Trades and Offshore Links Probed
Further findings include suspicious block trades in Rajesh Exports shares. The ED indicated that some individuals involved in these trades have appeared in disclosures released by the International Consortium of Investigative Journalists (ICIJ), suggesting potential undisclosed offshore links. The agency alleges that more than Rs 600 crore was siphoned out of India through share manipulation involving NRI benamidars.
Rajesh Exports, one of India's largest gold exporters and jewellery manufacturers, has not yet publicly responded to the detailed findings released by the Enforcement Directorate. The investigation remains ongoing.