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Sharma's questioning continues over Mauritius-UK funds

The Enforcement Directorate continued questioning of the First Global owner Shanker Sharma for the third day Friday in connection with sale of shares to foreign investment institutes and movement of funds from Mauritius to the United Kingdom and back in alleged violation of FERA (Foreign Exchange Regulation Act).

Denying the claims of the First Global spokesman that the case had been initiated after Tehelka went ahead with its story on corruption in defence deals, highly-placed sources in the agency said that the first complaint against Sharma was registered on March 7 this year.

The sources said that the Reserve Bank of India in its complaint had asked the ED to probe the transfer of £310,000 from Mauritius to UK.

The sources said ED sleuths were questioning Sharma about the purchase of a company in Mauritius at $5000 while the estimated value of the company was $1.2 million at the time of taking over.

The ED alleged that Sharma had applied to the RBI for setting up a company in UK but went ahead and incorporated the company at £2 as paid up capital pending permission.

Later the UK-based company sought an assistance from the Mauritius-based company and an amount of £310,000 was forwarded which was also returned within a few days, the sources said.

RBI has asked the ED to probe the transfer of funds as it looked to be a complex transaction and the exact connection between the two needed a probe, they said.

In its complaint, the RBI had said that the movements of fund from Mauritius to UK and back should be subjected to intense investigations.

The ED sources alleged that prima-facie the bunglings by Sharma's First Global seemed to be to the tune of Rs 560 million but actual amount would come out only after the investigations were complete.

ED sources said another allegation against Sharma had been levelled by the Income tax authorities in which it was said the First Global had sold nearly 850,000 shares of Himachal Futuristic Communication Limited to FIIs without the permission of Reserve Bank of India.

The shares have been found to have been purchased at a price of Rs 1050 and sold at Rs 1060 to some FIIs while the actual price at the time of selling was ranging between Rs 2100 to Rs 2211.

The sources said that profit earned by these FIIs from the purchase of these shares had been frozen in at least 10 banks.

The sources said that Sharma had earlier been served a notice under FEMA (Foreign Exchange Management Act) which was converted to FERA after the Directorate was convinced that the offence had been committed under the latter act.

ED has a deadline of May 31 next year to finish off all FERA cases.

The sources alleged that Sharma had an "evasive" approach to all the earlier summons served on him which led to his arrest.

Sharma's plea for lawyer during investigation rejected

A city court on Friday rejected the application of Shankar Sharma, owner of the First Global Security Services arrested in connection with alleged FERA violation, seeking permission for the presence of his lawyers during the course of interrogation by the ED.

Dismissing Sharma's plea, who was arrested last week for alleged FERA violations during the stock market scam in 2000, additional chief metropolitan magistrate V K Maheshwari said, "After considering the ratio of law laid down by a larger bench, an accused is not entitled for presence of his lawyer/non-lawyer during the investigation/interrogation under the Customs Act and FERA

Sharma's counsel Rani Jethmalani had moved an application seeking permission for the presence of lawyers during the investigation of case stating that since the accused has been arrested and was under the custody of ED for interrogation, Article 22 (2) of Constitution was applicable.

However, additional solicitor general K K Sud, appearing for ED opposed the application contending that presence of Sharma's lawyers during the probe will cause prejudice to the ongoing investigation which involves economic offences of huge magnitude.

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