ED seizes properties in FEMA case against K'taka mining firm directors over London, Oxford assets

Bengaluru, Aug 21 (IANS) The Enforcement Directorate (ED) has ordered the seizure of immovable properties worth approximately Rs 61.35 crore under Section 37A(1) of the Foreign Exchange Management Act (FEMA), 1999, in a major crackdown on alleged foreign exchange violations by the promoters of a Karnataka-based mining company.

According to the ED press release issued on Thursday, the properties belong to Shantesh Gureddi and his wife Jyothi Shantesh Gureddi, both Directors of M/s Sri Kumaraswamy Mineral Exports Pvt. Ltd. (SKMEPL). They are linked to foreign assets held illegally outside India. The ED's action follows intelligence input from the Income Tax Department.

According to the ED, the couple allegedly acquired an upscale property located at No. 09, Hay’s Mews, London, valued at £6.4 million (around Rs 61.73 crore), by diverting export proceeds from SKMEPL through a web of shell companies registered in the British Virgin Islands (BVI).

SKMEPL, which owns and operates iron ore mines in Karnataka, had exported ore primarily to China using intermediaries. The ED found that the company’s directors set up multiple overseas entities allegedly to receive profits, bonuses, and export incentives from these transactions. ED said that they also opened several foreign bank accounts to park funds abroad and purchase properties in their own and family members’ names — none of which were disclosed to Indian authorities, in violation of FEMA regulations.

Further investigations revealed that an attempt was made to write off nearly Rs 20 crore in export receivables, and an additional Rs 6 crore was due as “agency commission” to a subsidiary company, Kuminex Minerals Private Limited, which was incorporated by the same promoters to facilitate exports and earn commission, said ED.

According to the press release, the London property was initially purchased in the name of an overseas entity and later transferred to another foreign company where the couple’s daughter, Neethi Gureddi, is listed as Director and shareholder. Another undeclared overseas property was also identified — located at 116, Empress Court, Woodins Way, Oxford — further deepening the case against the Gureddi family.

The ED said the couple's actions, including acquiring foreign exchange and holding assets abroad without requisite permissions, amount to a contravention of Section 4 of FEMA, 1999, involving a total estimated value of Rs 61.73 crore. Further proceedings under FEMA are underway.

--IANS

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