Chennai: Former Union Minister Jagathrakshakan, who is one of the most financially resourceful second line leaders in the DMK, and his family members have been imposed a whopping penalty of Rs 908 crore under the Foreign Exchange Management Act (FEMA). This is among the highest penalties imposed for FEMA violation in recent decades.
Jagathrakshakan, who had started his political career in the AIADMK, is now a Lok Sabha MP from Arakonam and his family has several business interests in India and abroad. In 2019, a Singapore-based company in which his family members owned stakes was linked to a record foreign direct investment of $3.85 billion in an oil refinery in the neighbouring island nation of Sri Lanka.
The Directorate of Enforcement (ED) in Chennai, had initiated investigations against Jagathrakshakan and his family members and related Indian entity, which in September 2020, had led to the passing of a seizure order of properties worth Rs 89.19 crore. While within some months the seizure order was set aside by the competent authority, the ED has appealed against it before the Appellate Tribunal.
The agency, on Wednesday said that in December 2021, it had filed a complaint under FEMA before the Adjudicating Authority against Jagathrakshakan, his family members and the Indian company. They were accused of FEMA violations particularly in respect of their investment to the tune of Rs. 42 crore into a shell company incorporated in Singapore in 2017, and acquisition/holding of Singapore Foreign Shares and its subsequent transfer amongst the family members in defiance of extant provisions of FEMA, and also with regard to the investment of around Rs. 9 crore made into a Sri Lankan entity.
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Jagathrakshakan had unsuccessfully challenged this before the Madras High Court.
“Consequently, the Adjudication Proceedings under FEMA were completed after following due process of law. Upon careful examination of the alleged violations by the Noticees vis-à-vis the written replies filed by the Noticees, it was found that the alleged violations were clearly proved,” the ED said.
Consequently, penalty was levied with respect to each of the alleged violations. “The properties worth Rs. 89.19 crore which was seized in terms of Section 37A of FEMA was also ordered for confiscation, and penalty of Rs.908 crore (approx.) is levied vide Adjudication Order dated August 26, 2024,” the central agency confirmed.
