The Enforcement Directorate (ED) has attached assets worth Rs48.87 crore belonging to Ahmedabad-based Sintex Industries in connection with a foreign exchange violation probe related to the Panama Papers.
The attachment was made following a probe into the floating of offshore entity Amarange at British Virgin Islands by Sintex owner Rahul Patel.
''The names of Shri Amit Patel and Shri Rahul Patel had figured in the Panama Papers case with respect to their stakes / interests in Amarange Inc, BVI. Accordingly, investigations under Foreign Exchange Management Act (FEMA), 1999 were initiated by the Enforcement Directorate,'' an ED statement said.
"ED has seized properties, including land pieces admeasuring 1,09,542 square metres and 18,309 square metres worth Rs48.87 crore (equivalent to $3 million) in the form of immovable assets of M/s Sintex Industries Ltd, Ahmedabad, under Section 37A of Foreign Exchange Management Act, 1999," the statement official said.
The official further said that investigation had also revealed that Sintex Industries Ltd had remitted €73.05 million to Sintex Holding BV at Netherlands (WOS) in the period 26 May 2007 to 27 July 2009, as overseas direct investment.
"Amit Patel is the director of the overseas company. Further, Sintex Holding BV, Netherlands, had created a wholly owned subsidiary named Amarange Inc which was incorporated in British Virgin Islands (BVI) with Amit Patel and Rahul Patel as its directors," the ED said.
The funds remitted as overseas direct investment by Sintex Industries Ltd were utilised by Sintex Holding BV, Netherlands, for acquiring a property in Singapore.
"In 2009, Sintex Holding BV, Netherlands, attempted to sell Amarange Inc, BVI to Hanca Investment Ltd, BVI for $8.20 million. For this, Sintex Holding BV, Netherlands had received $3 million but due to default in the payment of the balance amount of $5.20 million by Hanca Investment Ltd, BVI, Sintex Holding BV forfeited $3 million and the share sale was annulled. Sintex Holding BV, Netherlands, remained the beneficial owner of Amarange Inc, BVI," the ED statement said.
"Further, during 2017, the property in Singapore was sold for Singapore $62,50,000 and, consequently, Sintex Holding BV, Netherlands, dissolved Amarange Inc, BVI, on August 8 this year having engaged in no business or activity except for the purchase and sale of Singapore property," it said.
An ED official said that both these transactions of $3 million and Singapore $62,50,000 were shown as income for Sintex Holdings BV, Netherlands, and never brought back to India.
"Thus, Sintex Industries Limited had violated the provisions of FEMA and that a total of Rs48,87,22,500 is still being held outside India as a result of the said transfers," the official said.
In April 2016 it was reported that Patel - one of the three managing directors of Sintex Industries Ltd, which is best known for its water tanks - was a director in a BVI entity named Amarange Inc which was registered in 2008. The company was struck off the Mossack Fonseca records in 2014. The purpose for which it was set up has been recorded as: ''Investments and for holding real estate in Singapore''.
The ED said its probe found that the accounts of the firm, through its subsidiary in the BVI, was used to purchase an immovable property in Singapore in alleged contravention of foreign exchange laws and hence action was taken against them.
Contacted by The Indian Express in 2016, Rahul A Patel had said, ''We have a number of companies registered abroad. I am not sure if Amarange Inc is still ours.''
Sintex Industries managing director Amit D Patel had said, ''We acquired this (Amarange Inc) in 2007. When you acquire a company, you need to hold it outside India and then repatriate the dividends to India. So it is done with RBI permission and guidelines. We also borrow money there and send money outside India to fund our acquisition and we also get dividends from those companies into India. It (Amarange Inc) is part of our balance sheets and we also disclose (information about) it in our balance sheets since 2007. We keep on creating and closing these companies as and when the acquisition opportunities arise.''