ED charges top telecom firms with Rs4,300-crore forex fraud

The Enforcement Directorate has slapped charges of foreign exchange rule violations, involving a total of Rs4,300 crore, on 10 of the country's top telecom firms, including Swan, Loop and S-Tel, in the 2G spectrum scam.

Shahid Balwa-promoted Swan Telecom was found to have committed the maximum violation of Foreign Exchange Management Act (FEMA), involving around Rs3,608 crore.

"This contravention was done by the company in issuing shares to foreign investor and resident investor under an agreement and had issued shares to foreign investor on an abnormal value to avoid the permission of FIPB (Foreign Investment Promotion Board), Government of India," the ED said in its complaint against Swan Telecom.

Swan Telecom Pvt Ltd issued 44.73 per cent shares to Dubai-based Etisalat and 5.27 per cent shares to Genex Exim as per agreement on 23 September 2009.

While issuing shares to the foreign investor, Swan Telecom also allegedly appointed a director nominated by Dubai-based Etisalat in contravention of the provisions of the rules prescribed by the commerce and industry ministry.

Swan Telecom also arranged a steering committee having members of their foreign partner for functioning of the company.

Also, ED alleged that Swan Telecom had wrongly disclosed the equity issue to Genex Exim under "resident category" while investigations found "it was an indirect foreign investment in Swan because funds into Genex were brought from Dubai."