NEW DELHI (TIP): Realty giant and Commonwealth Games Village builder Emaar MGF was on Tuesday slapped with a show-cause notice of Rs 8,600 crore by the Enforcement Directorate for violating Foreign Exchange Management Act (FEMA). The company is alleged to have diverted FDI money to buy thousands of acres of agricultural land in violation of FEMA and FDI rules and could face a penalty in excess of Rs 25,000 crore.
Significantly, the development comes on a day the Union Cabinet approved the Real Estate Regulators Bill. Sources said the company had used a modus operandi similar to as alleged in the case of Walmart, under investigation by the ED for diverting FDI money to retail sector through various subsidiaries. Emaar MGF allegedly used a maze of subsidiaries through which it diverted FDI money — brought in for investment in construction projects — to buy agricultural land. ED first raided 13 premises of the company here and elsewhere in 2009 in connection with the case and had seized several documents and large amounts of cash.
Investigations then found that almost 70% of the company’s land bank was agricultural land. Out of over 12,000 acres of land bank with the company, close to 8,500 acres were found to be agricultural, most of which is alleged to have been bought by FDI money. The firm is also alleged to have floated over 300 companies as subsidiaries in India and abroad with several of its lowgrade employees listed as directors. Some of these companies were allegedly used to divert FDI into agricultural land bought around Delhi, Haryana , Punjab and Uttar Pradesh.