Corporate fraud investigation body SFIO has recommended prosecution against mines major Sesa Goa on nine grounds, including over and under-invoicing of export/import of over Rs 1,000 crore.
After an investigation, spanning over one-and-a-half years, the Serious Fraud Investigation Office (SFIO) has found that iron-ore exporter Sesa Goa has over-invoiced import receipts of coking coal by Rs 14.6 crore and also sale of iron-ore by Rs 42.51 crore, while under-invoicing exports by Rs 1,002 crore.
Under-invoicing is normally done to avoid paying tax. Under the practice, companies mention in their records an amount less than what was actually delivered and pocket the difference.
The SFIO has also recommended prosecution against the Sesa Goa’s Managing Director, and the Company Secretary for violations under the Companies Act, 1956.
Sesa Goa, which is now owned by NRI billionaire Anil Agarwal, could not be contacted immediately.
The SFIO has also alleged that Sesa Goa made excess payment of agency commission to sales agent amounting to Rs 40.6 crore to facilitate its exports of iron-ores to foreign buyers.
“Such Sales agents included Mitsui & Co (of Japan and Hong Kong), Nissho Iwai Corpn (Japan), Ahmed Jaffer & Co (Pakistan), and Arim Peks (Turkey),” the SFIO report said.
The report also accused the company’s independent directors and statutory auditor of non-cooperation with the investigations, and has also recommended prosecution on this basis.
In 2009, the SFIO was asked to investigate the affairs of Sesa Goa, following a report of the Registrar of Companies (ROC), which ‘prima facie’ found the company guilty of fudging invoices.
Allegations against the company also included diversion of funds, which, the SFIO reports rejected.
The RoC had been looking into Sesa Goa’s case since 2003 when the company was majority-owned by Mitsui Co.
Anil Agarwal-promoted Vedanta Resources acquired 51 per cent controlling stake in Sesa Goa in 2007 from the Japanese company for USD 981 million.