The searches unearthed links to Chinese entities owned by Li Wenhuo, whose name appeared in the Panama leaks, the official release said.
The ED officials conducted the searches on suspicion that the companies were committing FEMA violations in the form of tax evasion. (Creative Commons)
The officials of the Enforcement Directorate (ED), who conducted searches at the offices and residential premises of six granite companies and their related entities in Karimnagar and Hyderabad on 9 and 10 November, seized unaccounted-for cash of ₹1.08 crore
The ED officials also secured voluminous data relating to the despatch of granite for the last 10 years from the quarries.
The entire operation also seems to have a link to the infamous Panama Papers case of 2016.
The case involved the leaking of 11.5 million pages — 2.6 TB — of data to news organisations across the world from the Panamanian offshore law firm and corporate service provider Mossack Fonseca.
It showed how the rich and mighty across the world were evading taxes, and where they had parked this unaccounted-for money.
At least 500 people from India alone were named in the papers. They included actors Amitabh Bachchan and Aishwarya Rai Bachchan, as well as now-disgraced business magnate Vijay Mallya.
In an official statement on Friday, the ED said the companies were Swetha Granites, Swetha Agencies, Sri Venkateshwara Granites Private Limited, PSR Granites Private Limited, Arvind Granites, and Giriraj Shipping Agencies Private Limited.
ED has conducted searches at offices & residential premise of M/s.Swetha Granites & others in Karimnagar & Hyderabad to investigate & unearth FEMA Violations. During the search unaccounted cash of ₹1.08 Cr & various incriminating documents, digital media were found & seized.
— ED (@dir_ed) November 11, 2022
The officials conducted the searches on suspicion that the companies were violating the law as laid down by the Foreign Exchange Management Act (FEMA) of 1999.
The search teams found that these companies were exporting rough granite blocks to China, the Hong Kong Special Administrative Region (SAR), and other countries.
During the course of inquiries, it was found that the exported quantity was more than the quantity on which royalty was paid, and there was underreporting of the quantity while exporting.
In many instances, the export proceeds were not realised in the declared bank accounts, thereby indicating that the export proceeds were received through routes other than known or recognised banking channels.
During the search operation, the ED teams found and seized ₹1.08 crore unaccounted-for cash, allegedly received in hawala against the exports.
The teams also found multiple benami bank accounts, opened in the name of employees of granite exporters, in which cash received against the illegal granite exports was being deposited.
The search action also led to the detection of money being routed back from Chinese entities into Indian entities in the form of hand loans without documents.
These Chinese entities are owned by Li Wenhuo, whose name appeared in the Panama leaks, the official release said.
The ED investigation into illegal granite mining and FEMA violations was initiated on the basis of a report of the Vigilance & Enforcement Department of the Telangana government that large-scale evasion of seigniorage fee on granite blocks transported from the quarry lease areas of Karimnagar District to the Sea Ports by Railways was detected.
The department also raised demands for the evaded royalty, but the exporters did not pay. Further investigation is under progress, the ED said.
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