‘Fema violation’ case: ED seizes ₹41.64cr assets of Pune bizman

The Enforcement Directorate (ED) has seized immovable properties worth ₹41.64 crore belonging to Zavareh Soli Poonawalla, brother of Serum Institute of India (SII) chairman and managing director Cyrus Poonawalla, and his family members in connection with a foreign exchange violation probe linked to the Panama Papers, the agency said on Monday.

The agency alleged that Zavareh Soli Poonawalla and his family members were accused of misuse of the Liberalised Remittance Scheme (LRS) under the provisions of the Foreign Exchange Management Act (FEMA), 1999.

To be sure, the FEMA action against Zavareh Poonawalla has nothing to do with SII or Cyrus Poonawalla.

A statement issued by the ED said it has “seized three immovable properties located at Ceejay house, Worli, Mumbai, worth ₹41.64 crore under the provisions of FEMA in its probe against Zavareh Soli Poonawalla and his family members”.

“...investigation revealed Zavareh Soli Poonawalla and his family members had remitted foreign exchange abroad by mis-utilizing the provisions of LRS scheme”.

The agency added “Zavareh Poonawalla and family members used the maximum permissible limit and from the year 2011-12; adding that they remitted money abroad via mis-declarations under the pretext of ‘family maintenance and self-maintenance’ etc, however none of their family members was residing abroad or holding NRI (non-resident Indian) status”.

The Panama Papers’ expose pertains to massive leak of financial files -- over 11 million documents -- released in April 2016, from the database of Mossack Fonseca, which was released to German newspaper Suddeutsche Zeitung (SZ). The data revealed how politicians, celebrities, businessmen across the world including several big Indian names used the law firm for laundering money, dodging transactions and evading taxes.

HT reached out to Poonawalla Group and SII for comments but there was no response till the time of going to press.

The ED said the “entire funds remitted by Zavareh Soli Poonawalla and his family members under LRS (scheme) were invested into British Virgin Islands based Stallast Limited”.

“The funds remitted by Zavareh Soli Poonawalla and his family members were utilized by Stallast Limited to purchase four properties in the UK. These properties include four apartments at Paddington, London,” the ED statement added.

The agency found multiple FEMA contraventions in the transactions.

“Apart from mis-declarations in the remittances, Zavareh Soli Poonawalla and his family members wrongly claimed these investments as foreign portfolio investments, but in reality, the foreign entity was completely controlled by them and thus, they did ODI (overseas direct investment) in a foreign WoS (wholly owned subsidy) without due permission of the Reserve Bank of India,” the statement said.

It further said the foreign assets were not declared to the RBI. “They continued to hold the above foreign assets till date and are in continuous enjoyment of the same,” the ED said.

“The properties abroad were acquired through the funds remitted under LRS to avoid reporting requirements to RBI and thus, Zavareh Poonawalla has mis-utilized the Liberalized Remittance Scheme. Therefore, the equivalent value of properties held by them in India have been seized under the provisions of Section 37A of FEMA. ED has seized Office space at Ceejay House, Worli, Mumbai, by passing an order under FEMA 1999 on May 5, 2023,” the agency statement added.