SFIO wants prosecution of Sesa Goa

The Serious Fraud Investigation Office (SFIO) has recommended prosecution of mines major Sesa Goa on nine grounds, including over and under-invoicing of export/import of Rs 1,000 crore.

After an investigation spanning a year and a half, the SFIO says it found ironore exporter Sesa Goa had over-invoiced import receipts of coking coal by Rs 14.6 crore and also sale of iron-ore by Rs 42.5 crore, while under-invoicing exports by Rs 1,002 crore.

Under-invoicing is normally done to avoid paying tax. Under the practice, companies mention in their records an amount less than what was actually delivered and pocket the difference.

 

The SFIO has also recommended prosecution against the company’s managing director, and the company secretary for violations under the Companies Act, 1956.

Sesa Goa, now owned by NRI billionaire Anil Agarwal, could not be contacted immediately.

The SFIO has also alleged Sesa Goa made excess payment of agency commission to sales agents amounting to Rs 40.6 crore to facilitate its exports of ironore to foreign buyers.

“Such sales agents included Mitsui & Co (of Japan and Hong Kong), Nissho Iwai Corpn (Japan), Ahmed Jaffer & Co (Pakistan), and Arim Peks (Turkey),” the SFIO report said.

The report also accused the company’s independent directors and statutory auditor of non-cooperation with the investigations, and has recommended prosecution on this basis.

In 2009, the SFIO was asked to investigate the affairs of Sesa Goa, following a report of the Registrar of Companies, which ‘prima facie’ found the company guilty of fudging invoices.

Allegations against the company also included diversion of funds, which the SFIO reports rejected.

The RoC had been looking into Sesa Goa’s case since 2003 when the company was majority-owned by Mitsui Co.

Anil Agarwal-promoted Vedanta Resources acquired 51 per cent controlling stake in Sesa Goa in 2007 from the Japanese company for $981 million.