Ed To Slap Rs 60cr Penalty On Itc, Chugh & Kutty

The Enforcement Directorate will issue an initial show-cause notice to ITC Ltd and its directors next month, imposing a penalty of Rs 60 crore for Foreign Exchange Regulation Act (Fera) violations.

Former ITC chairman K L Chugh, and former directors GKP Reddy and R K Kutty are among those who would be issued show-cause notices along with the company, top enforcement officials said.

The tobacco major has been charged Fera violations amounting to $100 million, on which the penalty could be as high as Rs 300 crore.

Ashutosh Garg, the erstwhile director of ITC Global, the Singapore-based trading arm of ITC Ltd, and ITC chairman Y K Deveshwar are not named in the ED short-list.

 

The ED, which had recently sent a team to Singapore to probe the violations, has unearthed substantial evidence in support of their allegations. Though the directorate has refused to divulge the details, officials assert that the evidence is sufficient to pin down the Calcutta-based company.

The Enforcement had earlier arrested GKP Reddy, former chairman and director of International business division (IBD), R K Kutty, chairman and director of IBD, R B Ravindranath, former vice-president, IBD, and M B Rao, former export manager of IBD, on October 31 last year.

The Fera violations involve irregular forex transactions of over $100 million by ITC Global between 1991 and 1996. Of the total amount, the majority of transactions comprise trading of agricultural commodities. ITC had also allowed some $82.5 million to be parked abroad by the Chitalias, ITCs former partners based in the US, under a 165-day interest free credit.