Guntur Tobacco Traders Summoned

The investigations into ITC's alleged $100-million Fera violation case has taken a new turn with the Enforcement Directorate (ED) summoning tobacco merchants from Guntur to question on purchases made by ITC's Indian Leaf Tobacco Division (ILTD).

The merchants will be quizzed on the price rates at which leaf tobacco was purchased from them. These will be matched with the invoice papers seized from the division's premises during the nationwide crackdown by ED sleuths last October, in order to determine if and to what extent underinvoicing was done.

So far, the ED has questioned ITC officials on the case. In the second half of February, the ED will focus its probe on the alleged irregularities in the leaf tobacco division.

 

The third round of investigations are slated to begin from February 14. ED officials refused to divulge the names of the tobacco merchants to be questioned.

The case will come up for internal evaluation in March. Sources at the Enforcement Directorate said the final report prepared by the department will be drafted by the end of April and the chargesheet will be made around April 30, that is six months after the case began.

The show-cause notice is expected to come up only after the chargesheet is prepared and submitted.

The ILTD stopped exports for about a month after the ED raids on October 30, 1996. ITC sources said the cigarette giant was authorised to resume exports from the end of November 1996.

In a faxed message to Business Standard, an ITC spokesman said: "Exports have not remained stagnant although there was a temporary disruption. ILTD leaf tobacco exports for 1996-97 will be much higher than that of 1995-96 and higher than its own target."

The ED is reported to have summoned tobacco merchants from Guntur, where ILTD is located, on the basis of information collected from the customs department which is currently investigating the case from that end.

It is alleged that leaf tobacco exports were underinvoiced and the funds retained abroad. Statements made by the merchants is expected to determine the extent and amount of funds retained.

Although there was a lull in the pace of interrogations at the ED for the past one week, the department had questioned Shivkumar, an ILTD employee of the general manager level on Monday.

While the directorate is expected to go full steam on alleged ILTD irregularities in the next two weeks, other divisions and associate companies of the tobacco major will come up for overall scrutiny in March.