June 06, 2020
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"If They Do Not Cooperate, We Have Our Own Ways"

Thirtysomething Deputy Director of the Enforcement Directorate K.K. Kabir Panthi, commander of the biggest ever enforcement crackdown in Indian corporate history, is extremely confident of being able to prove the allegations against ITC. Excerpts fro

"If They Do Not Cooperate, We Have Our Own Ways"

What kicked off the investigation and the subsequent action in the ITC case?

The Audit Committee Report by Lovelock & Lewes gave us an insight into the unfair practices being carried out in ITC. We also received information through banking channels. Other channels like hawala were also being investigated. Our investigations were on as a matter of routine, but the audit report was the last straw. This is possibly the biggest corporate fraud committed in recent times.

What is the main charge?

We have documentary evidence indicating FERA violations worth over $100 million (over Rs 350 crore). We have sufficient evidence to show that ITC had parked fictitious profits into its books by manipulating its financial transactions abroad which were being brought back to India. The funds had been retained all over the world in various bank accounts.

The recorded statements of the four officers arrested initially indicate that a large part of the funds (including that of the Bukhara deal) was retained abroad and transferred through a Swiss numbered account to the Chitalias in the US. We also have evidence that the FERA violations continued till very recently, even after Y.C. Dev-eshwar took over. There is also evidence of the Singapore-based ITC Global’s role in this fraud and of over-invoicing by ITC Bhadrachalam in machinery imports. One of the directors has already confessed that he was involved in retention of a large amount abroad, and transferred through Swiss numbered accounts to NRI shareholders in a front company.

Have all the people on the firing line been interrogated?

We have just completed one phase of our action. Our investigations may continue till January. We have enough documentary evidence to bring out every person involved. It only depends on how they cooperate. It is up to them to make it easy or difficult for themselves and their company.

What about Deveshwar?

Deveshwar’s interrogation is only half complete. We questioned him on October 31 but it was incomplete. The detailed interrogation will be on November 4. He pleaded with us that he had some important meeting in Delhi during the weekend; so he was allowed to leave on a personal guarantee that he would be back here for questioning on November 4 when we would resume his interrogation. He has assured full cooperation in this direction and we have taken a statement in this regard from him.

Deveshwar is as important a player in ITC affairs as Chugh or Sapru. Why was he not arrested with them?

It is not ruled out. We are keeping our options open till the interrogation is over. If we find that Deveshwar is personally involved or even that the FERA violations took place with his knowledge, whether he was part of it or not, we are duty-bound to arrest him too and we would have evidence to substantiate our action. If he is in it, we will get him.

Now that some of the most important people at ITC are under arrest, what is the immediate course of action?

The arrested people have been put in custody till November 13. Meanwhile, our investigations and interrogations of key people in ITC will continue and we will pick whosoever we think necessary for interrogation. We have arrested only those people who were directly involved in the FERA violation or were part of the management and knew about it.

Are further raids ruled out?

Certainly not. We do not rule out re-raids if we deem them necessary. When we get these reports, we will take stock of things and decide our further line of action.

It seems that the mood in ITC is that till such time the Enforcement Directorate files concrete charges in court the ITC has nothing to defend.

I would only like to say that we have substantial documentary evidence to support and substantiate our action. It depends on the cooperation of those people. If they do not cooperate, we have our own ways.

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