Telenor and Etisalat, which have invested in Unitech Wireless and Etisalat DB could end up losing all their investments and also paying an additional fine for violation of provisions of the Prevention of Money Laundering Act (PMLA).
Even as a five-member team is in Mauritius to probe the possible use of front entities that got 2G licences, the Enforcement Directorate (ED) has come across certain bank guarantees-provided overseas-which are considered to be violations of the Foreign Exchange Management Act (FEMA).
This will be in addition to the properties and licences that may be attached by the agency under PMLA to recover losses.
These foreign companies may have to forfeit all their investments and even end up paying more in terms of penalties, once the violations are established.
Meanwhile, ED has already summoned officials of some of these foreign companies for questioning to substantiate the sources of fund infusion into the Indian arm.
Telenor and Etisalat had acquired stakes in the local entities by subscribing to new shares issued by the companies.
In April 2011, ED had begun identifying Unitech Wireless? properties and other assets to recover losses incurred to the exchequer.
It is believed that Unitech’s properties, worth Rs 23.40 billion, will be attached under PMLA to recover losses. Promoters of Unitech Wireless had invested around Rs 1.38 billion in the company?s equity and when it diluted its stake in favour of Telenor, this equity was valued at Rs 24.80 billion (based on Unitech Wireless’ enterprise value). The gain was estimated to be around Rs 23.42 billion, which the government now wants to recover from the firm.
Similarly, Etisalat had paid $900 million to acquire a 45 per cent stake in Swan. Investigative agencies have also said that Genex Exim, another shareholder in Swan, indirectly obtained funds from the UAE to stay within the permissible foreign investment level of 74 per cent.
