ED conducts searches at Hiranandani group entities over FEMA violations

MUMBAI: The Enforcement Directorate (ED) on Thursday conducted searches at four premises linked to real estate giant Hiranandani Group and its group entities. The searches were in connection with alleged contravention of the FEMA (Foreign Exchange Management Act) provisions with respect to two of its housing projects in Panvel and Chennai.
The group entities had allegedly received funds of over ₹400 crore via the Foreign Direct Investment (FDI) route for the housing projects but the utilisation of the amount in these projects were allegedly not as per prescribed government guidelines, ED sources said. They added that Niranjan Hiranandani, his son Darshan Hiranandani, who is said to be based in Dubai, and their group entities are under scanner for the alleged violations.
ED’s searches were conducted at three locations in Mumbai, including the corporate and registered offices of the group entities and Niranjan Hiranandani’s residential premises in south Mumbai, and a site office in Panvel, ED sources said.
Speaking on the alleged violations, an ED source said, “One of the group entities which had received the FDI, did not repay loans taken from a consortium of banks and was declared a Non-Performing Asset. Interestingly, the incomplete project was then taken over by another Hiranandani group entity in the subsequent resolution proceedings.”
As per the information available with the agency, Niranjan Hiranandani and his family members were allegedly the beneficiaries of an offshore trust, which had accumulated assets of more than $60 million, ED sources said. “The group was earlier also named in the Pandora Papers,” the source said. ED’s probe also learnt that the Hiranandanis had allegedly set up at least 25 companies and a trust in the British Virgin Islands between 2006 and 2008.
Reacting to ED’s FEMA probe and the searches, an official spokesperson of the Hiranandani Group said, “We have extended full cooperation to the department by facilitating all the relevant information and clarification sought by them. Since the inquiry pertains to a 15-year-old development, it took time to dig out old records.” The spokesperson added, “The group understands that ED is satisfied that there were no FEMA violations. The group will remain cooperative and law abiding.”