NEW DELHI, November 21: The Enforcement Directorate (ED) is set to issue two more show cause notices to liquor major Shaw Wallace and Company Ltd (SWCL) in the next 3-4 weeks for alleged FERA violation to the tune of Rs 75 crore.

The first was issued on November 6 by the ED's Calcutta office. The notices, being vetted the ED headquarters in Delhi, relate to alleged diversion of funds from the company through bogus firms and distributors. According to sources, nearly Rs 70 crore wase allegedly diverted out of Shaw Wallace through six Guwahati-based firms in violation of Section 9(1)(D) of the Foreign Exchange Regulation Act (FERA), 1973. The company invested Rs 89.2 crore in its 17 subsidiaries, which used the funds to acquire the Guwahati firms through spot delivery. Thereafter, Rs 70 crore was siphoned off by withdrawal of cash. The matter is also being investigated by income tax authorities. In another deal, funds to the tune of Rs 5 crore were allegedly diverted through distributors.

The November 6 notice was issued to Shaw Wallace, its non-executive chairman Manu R Chhabria and ex-director Jolly Bhargava for alleged under-invoicing of export of whisky and beer to Dubai to the extent of $16,32,383..The ED has accused the company of not taking steps to secure the under-invoiced amount in India as required under section 16(1)(b) of FERA. Instead, payments were made to Chhabria and his nominee. The ED has asked the company to show cause in writing within 30 days why adjudication proceedings should not be held against it for the alleged contraventions.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.