The penalty has been slapped for "suspected contravention" of foreign exchange rules inside and outside the country by the company.
India's Enforcement Directorate (ED) has slapped an INR70 billion (USD1.57 billion) penalty on telecom firm Etisalat DB, a subsidiary of Emirates Telecommunications Corporation, related to the 2G spectrum allocation scandal, the South Asian nation's largest alleged fiddle in history.
The ED, in a complaint filed before the Competent Adjudicating Authority for violations of the Foreign Exchange Management Act, said the penalty has been slapped for "suspected contravention" of foreign exchange rules inside and outside the country by the company, according to the Press Trust of India.
Etisalat DB, a joint venture between UAE-based Etisalat and DB Realty group, has been given 30 days time to explain why the company should not be fined INR70 billion, PTI said.
The ED has found violations of Foreign Exchange Management Act (FEMA) by the company on various fronts, including non-reporting of the receipt of funds from abroad within a stipulated period to the Reserve Bank of India.
Etisalat, as a foreign partner, holds a 45 per cent equity stake in Etisalat DB (formerly Swan Telecom). The agency had earlier charged Shahid Balwa-promoted Swan Telecom with committing FEMA contraventions to the tune of INR36.08 billion.
"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 had said in its complaint against Swan Telecom.
Swan Telecom issued 44.73 per cent shares to Etisalat and 5.27 per cent shares to Genex Exim as per agreement on September 23, 2009. Swan Telecom while issuing shares to the foreign investor under the agreement also allegedly contravened the provisions of the rules prescribed by the Commerce and Industry Ministry by appointing a director who had been nominated by Etisalat.
© Zawya 2011
