Garoma Anstalt Enabled Itc Global Under-Invoicing

It supplied machinery worth $2 million to ITC Bhadrachalam, a subsidiary of the tobacco major, which is now being probed for violations of the Foreign Exchange Regulations Act (Fera).

Garoma, along with another Italian company, had exported machinery worth Rs 36 crore to ITC Bhadrachalam in 1994 for its Rs 530 crore expansion programme.

ED sources say the actual amount that changed hands was $82.5 million. The invoice difference was kept abroad and re-routed to India for ITC through the Chitalias, they say.

The ED plans to probe into these alleged irregularities by the ITC subsidiary on a war-footing in the second phase of its investigations, slated to commence in January next year.

Another deal carried out by the subsidiary, supply of waste paper to the Chitalias and the subsequent under-invoicing, is also under scrutiny. The quantum of funds changing hands and shown as export remittance is yet to be worked out. Sources allege the beneficiaries of the waste paper deals were former ITC chief K L Chugh and R P Agrawal. This however is yet to be established by the enforcement directorate.