For the first time since the Iraq oil scam surfaced 11 months ago, former external affairs minister K Natwar Singh has been directly accused by the Enforcement Directorate of 'jointly and severally' acquiring foreign exchange in contravention of FEMA regulations, along with his son Jagat and three others.
An 18-page show cause notice issued by the ED on Singh and others says that they had 'jointly and severally' acquired foreign exchange totalling $8,98,027.79 in respect of two oil contracts with Iraqi government's State Oil Marketing Organisation in 2001.
Of this, they had transferred $7,48,550 to an account in Jordan National Bank, Jordan, in fulfillment of the pre-condition by SOMO for allocation of oil.
According to the notice, Singh and others transferred $1,46,247.23 being the commission amount in respect of two contracts in Barclays bank in Jersey, Channel Islands, belonging to Indrus Trading Company owned by Andaleeb Sehgal, a friend of Jagat.
The ED's notice, dated September 2, 2006, to which the recipients are required to respond within 30 days, comes despite the Pathak Authority saying in its report that 'there is no material evidence to show that Natwar Singh derived any financial or other personal benefits from the contracts'.
Natwar Singh reacted to the show cause notices by stating that this was an attempt by the ED to defame him and he would give a befitting reply through his lawyers.
The notice said that Natwar Singh, his son and others who have been named, failed to take all 'reasonable steps' to repatriate to India $8.98 lakh within the stipulated period and in the prescribed manner, violating provisions of FEMA and Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000.
It said Jagat Singh had, without RBI permission, made payments and transferred $89,000 to account number 11281208-0101 of COBURG Associates with Lloyds TSB and further amount of $14,500 to Fynmores.
From the COBURG account, Jagat Singh transferred $10,000 on June 27, 2001, another $20,000 on the same day and $15,000 on July 19, 2001 to accounts in Cyprus, Korea and Israel respectively.
These were to persons resident outside India.
The notice said that an amount of $43,793 was received from COBURG to the account of Hamdan Exports in New Delhi by 'mis-declaring' this amount as recepits of outstanding of export proceeds of this company.
"This amount appears to have been used for obtaining Mercedez Benz car no DL-3C-Q 1010 for use, control and absolute dominion of Jagat Singh," the notice said, adding the car was liable for confiscated under FEMA.
The ED notice said Jagat's friend Andaleeb Sehgal had floated two companies outside India -- Indrus Trading Corporation, Jersey, Channel Islands, and Hamdan Exports, British Virgin Islands -- and acquired shares of these two registered outside India without RBI permission, thus violating provisions of FEMA.
Sehgal opened bank account no 12349 with Jordan National Bank, Limassol, Cyprus, in his name without RBI permission.
He deposited $62,000 and transferred it to persons resident outside India. This account has a credit balance of $1930 as on May 25, 2006.
The notice said this amount was liable to be confiscated.
The ED documents said that Sehgal had told Jagat Singh that he would split the commission received by him in the event of getting the business.
During negotiations with SOMO for allocation of two million barrels of crude oil, Sehgal had said he would fulfill the requirement for an authorisation from the leader of the Indian delegation to Iraq, Natwar Singh.
A letter of undertaking from Hamdan Exports confirmed that an amount of 25 cents for Far East or European ports and 30 cents for US destination will be paid to SOMO within 30 days from the issue of bill of lading along with bank guarantee.
"Clearly, Sehgal, who was working on behalf of Natwar Singh and Jagat, had no hesitation in giving the committment and later fuilfilling the same as he was confident of getting the letter from Natwar Singh, the beneficiary on whose behlf he was working," the ED documents said.
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