ED raids Mumbai businessman named in Panama Papers, seizes Rs 41 cr of real estate

The Enforcement Directorate on Monday seized three offices in a prime location in Mumbai, valued more than Rs 41 crore, as part of a foreign exchange violation probe against a businessman whose name figured in the Panama Papers.

In a statement, the federal probe agency said the action was taken against Zavareh Soli Poonawalla and his family members.

They are accused of "remitting foreign exchange abroad by mis-utilising the provisions of the LRS (Liberalised Remittance Scheme)", it said.

The Enforcement Directorate (ED) seized three immovable assets located at the Ceejay House in Mumbai's Worli area to the extent of Rs 41.64 crore under the provisions of the Foreign Exchange Management Act (FEMA), the statement said.

Poonawalla and his family "used the maximum permissible limit (as available under the LRS) and from the year 2011-12, they remitted money abroad via mis-declarations under the pretext of 'family maintenance and self-maintenance' etc", the agency said. 

"However, none of their family members was residing abroad or holding NRI status," it alleged.

The entire funds remitted by Poonawalla, whose name was found in the Panama Papers revelations regarding offshore entities, and his family members under LRS were invested into British Virgin Islands-based Stallast Limited, the ED said.

Dubbed the 'Panama Papers', an investigation of a stockpile of records from Panamanian legal firm Mossack Fonseca by Washington-based International Consortium of Investigative Journalists (ICIJ) in 2016 had named several world leaders and celebrities who allegedly stashed away money abroad in offshore companies.

Investigators have said not all people whose name figured in this list were offenders.

The ED found that funds remitted by Poonawalla and his family members were utilised by Stallast Limited to "purchase" four apartments in the Paddington area of central London. Multiple FEMA contraventions were seen in these transactions, it alleged.

The ED said besides "mis-declarations" in remittances, Poonawalla and his family members also "wrongly" claimed these investments as foreign portfolio investments. In reality, the foreign entity was completely controlled by them and thus, they did overseas direct investment in a foreign wholly owned subsidiary without due permission of the Reserve Bank of India (RBI), the agency said.

The foreign assets were not declared to the RBI, and they continued to hold the foreign assets and are in continuous enjoyment of the same, it alleged.

"The properties abroad were acquired through the funds remitted under LRS to avoid reporting requirements to RBI and thus, Poonawalla mis-utilised the LRS," the ED said. "Therefore, the equivalent value of properties held by them in India have been seized under the provisions of Section 37A of the FEMA," it said.