Ed Inquiry Into Tata-Korf Deal At A Dead-End
Investigations into Tata-Korf for alleged Foreign Exchange Regulation Act (Fera) violation has run into a dead-end as the Enforcement Directorate (ED) failed to unearth sufficient evidence to support its allegation.
The ED had initiated investigations into Tata-Korf Engineering Services, a joint venture between Tata Steel and Korf KG, after the company acquired an aircraft valued at Rs 3 crore from overseas and showed it as a gift.
The gift was acquired when Russi Modi was the chairman of Tata Steel and the Tatas had not made any foreign currency payment for the aircraft.
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A senior revenue official said: "The investigations into Tata-Korf are not progressing satisfactorily. The ED has failed to achieve a breakthrough in this case and a new decision needs to be taken now about the future status of the case."
A team of ED officers recently made a trip to Germany to question Korf KG about its involvement in the transaction which had taken place in 1990, five years after the formation of the joint venture company. In fact, a show cause notice to Russi Mody was also being planned to question him in this regard.
According to sources, the officers could not unearth adequate evidence in support of the ED's earlier contention that the aircraft acquisition might be in violation of Fera.
The ED has to scrutinise the evidences afresh in order to take a decision regarding the maintainability of the case.
The ED had earlier enquired about the aircraft deal, questioning the frequency of visits by the foreign collaborators to justify the acquisition of the aircraft.
The aircraft, which had apparently been acquired for use by the foreign collaborators, was subsequently used by others, ED sources pointed out.
Tata Korf, which is a Tisco group company, undertakes consultancy and engineering contracts under a collaboration agreement with the Korf group. The Korf Engineering group was taken over by the German engineering major - Mannesmann Demag Huttentechnick (MDH) in 1995. At present, the company has a technology licence agreement with MDH.
The agreement includes transfer of technical know how and expertise for setting up pig iron and steel plants, mainly mini-blast furnace for iron-making and energy optimising furnace for steel-making.
The company had signed a memorandum of understanding for a steel project in Indonesia based on Korf's mini sinster plant, blast furnace and energy optimising furnace technologies.