NRI Businessman Gets Notice for Alleged Violation of Foreign Exchange Laws

NRI businessman CC Thampi has been slapped with a show cause notice by the Enforcement Directorate (ED) for alleged violation of the Foreign Exchange Management Act (FEMA) to the tune of up to Rs 1,000 crore. The violation was allegedly done in purchase of vast tracts of land in Kerala.

Thampi is the chairman of the Holiday group, with businesses based in India as well as the United Arab Emirates.

The notice, issued under the provisions of FEMA on Nov. 25, alleged contravention of Rs 1,014.75 crore by Thampi, his wife M Rodrigues and their companies, PTI reported. According to the central probe agency, the couple was under the radar of the agency for their reported dealings with families of some politicians and bureaucrats. The two were not entitled to purchase agricultural land as they are Non-Resident Indians.

This is the second time this year that the ED has issued a show cause notice to Thampi and his companies for alleged FEMA violation. The first time was in February when the notice was sent for acquiring 927 acres of land in the National Capital Region for FEMA violation amounting to over Rs 288 crore.

“Further probe in case of Thampi’s companies in Kerala revealed that he had adopted a similar modus operandi (like the Delhi-NCR land purchase instance) of forwarding loans to his companies and getting it converted into equity in his name and in the name of his family members and purchased land including agricultural land in the name of the companies,” a source told the news agency.

Holiday City Centre Private Limited, Holiday Properties Private Limited and Holiday Bekal Resorts Private Limited are also being investigated by the ED as part of the two show cause notices. Thampi is said to have acquired huge agricultural land mass in Palwal and Faridabad districts of Haryana in the name of his company, Holiday City Centre Pvt. Ltd. by circumventing law and in contravention of extant provision of FEMA.

The investigations conducted by the ED revealed that Thampi had advanced unsecured loans to his three companies. These loans were later converted into equity in his name and also in the name of his family members in these companies.

Thampi was also booked by the ED under Prevention of Money Laundering Act in a case concerning a wrongful approval for an engineering college in Thrissur by the All India Council for Technical Education in 2009.