ED carries out searches against Eros International in Rs 2,000 cr Fema case

The Enforcement Directorate Friday said it recently carried out searches against leading entertainment company Eros International Media Ltd and some linked entities as part of a probe into a Rs 2,000-crore foreign exchange law violation case.

The searches were undertaken on February 5 at five locations in Mumbai under the Foreign Exchange Management Act (FEMA), the probe agency said.

The company could not be contacted immediately for a response.

In a statement, the ED said the searches were part of an ongoing probe in the case of alleged "fund diversion" by Eros International Media Ltd and the other entities of EROS group.

 

"Incriminating" documents pertaining to overseas entities, immovable properties, overseas bank accounts and digital devices were seized, it said.

The federal probe agency said the probe was initiated based on Sebi investigation against EROS group and its promoters for alleged misrepresentation of finances and "diversion/siphoning" of funds amounting to around Rs 2,000 crore.

The main entity of EROS group is Eros International Media Ltd., which is an Indian motion picture production and distribution company.

Eros co-produces, acquires and distributes Indian films in multiple formats worldwide, including theatrical, television syndication and digital platforms, the ED said.

The agency said "evidences" have been gathered which indicate that EROS paid about Rs 2,000 crore as content advances to certain entities between 2012-13 and 2020-21 fiscal years.

"Eros wrote off major amounts due from these entities under the pretext of non-recovery due to the COVID-19 pandemic as a part of a balance sheet cleaning exercise."  "In this manner, EROS devised a scheme to inflate its financial statements by paying content advances, which were later diverted or round-tripped back to the company, with fictitious movie rights purchases used to hide the true nature of these transactions," the agency claimed.