ED Raids Hero Motocorp Chairman Pawan Munjal's Residence In Money Laundering Probe

The Enforcement Directorate (ED) on Tuesday raided Hero Motocorp Chairman Pawan Munjal’s residence after it took cognisance of a Directorate of Revenue Intelligence (DRI) case. The DRI recently apprehended one of Munjal’s close aides in possession of undeclared foreign currency. The raids against Munjal are a part of a money laundering probe.

Earlier Income Tax department had carried out raids at Hero Motocorp premises in Delhi-NCR.

The Income Tax department conducted search operations across 25 premises including Hero Motocorp offices and at the chairman’s residence as part of an investigation into alleged tax evasion against the firm.

The Ministry of Corporate Affairs (MCA) has ordered an investigation against Hero MotoCorp over alleged breaches of corporate governance norms.

The probe initiated under 'public interest' will investigate the true ownership of certain linked companies.

MCA is also probing the affairs of Salt Experiences and Management Pvt (SEMPL) suspected to be a ‘linked entity’ of Hero MotoCorp.

The Registrar of Companies has concluded an inquiry into Hero MotoCorp allegedly floating shell companies and asked for a thorough investigation into the affairs of the company and linked entities.

The government ordered an investigation under sections 210 (1) (c), along with section 216, of the Companies Act to investigate into the affairs of a company in ‘public interest’ and true ownership of the company.

In March 2022, Hero MotoCorp was raided by the income tax department over alleged tax evasion. The department had even covered the residence of Pawan Munjal, Chairman, Chief Executive Officer and Managing Director, of Hero MotoCorp while conducting the searches. The Central Board of Direct Taxes (CBDT) said in a statement that it found alleged illegal business expenses of over Rs 800 crore.

It had also alleged that it had found 10 acres of farmland in Delhi was purchased through a few companies.

"Expenditure aggregating to more than Rs 800 crore has been booked in the guise of purchase of services from a specific event management entity," the statement said.

In August 2018, Munjal was reportedly deplaned at the Indira Gandhi International Airport, New Delhi, after a person identified as Amit Bali was found to be carrying alleged foreign currency equivalent of Rs 81 lakh in his cabin luggage, which was found during the security check in by CISF officials.

Bali had subsequently told the Customs department official that he was carrying the forex on behalf of SEMPL and that it belonged to Munjal.

The Customs department subsequently sent a show cause notice to Munjal. Customs had alleged that Bali was the ‘lynchpin’ of the case who ostensibly carried forex in excess of the prescribed amount on several past occasions, and failed to declare them to customs authorities.

The probe had revealed that SEMPL had a yearly turnover of Rs 200 crore, and between 2014 and 2018, it had business of Rs 785.96 crore from Hero - without any written contract.

However, Hero had contended that it was a client of SEMPL and was merely a recipient of services provided by SEMPL.

In March last year, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) ruled in the favour of Munjal.

“Hero MotoCorp had arranged SEMPL as the service provider for event management outside India and it was the responsibility of SEMPL to acquire foreign exchange which was acquired by SEMPL and handed over to Amit Bali for discharge of the contractual obligation of organising and arranging meetings,” said the tribunal ruling.

The shares of Hero Motocorp Ltd at 1:32 pm IST were at ₹3,067.65, down by 4.24 percent.

Published on: Tuesday, August 01, 2023, 01:26 PM IST