India’s Enforcement Directorate (ED) has arrested an individual in an ongoing investigation into a fraudulent Global Depository Receipt (GDR) issue of the Hyderabad-based entity Farmax India Ltd. The defendant, along with the promoters of the GDR issuing company and others, conspired to dupe Indian investors by fraudulently subscribing to the GDR of Indian companies from loan obtained from the Austria-based Euram Bank.
With the financial advisory services of the defendant through his entity La Richesse Advisors Pvt. Ltd., Farmax India Ltd. raised $71.91 million in 2010 in Europe by issuing GDR. There was only one subscriber to this GDR – Vintage FZE, operated using loan taken from Euram Bank by pledging the GDR proceeds of the Indian company.
However, the GDR proceeds were never repatriated to India. In fact, the conspirators caused the GDRs to be sold in the Indian Stock market at an inflated price and caused a loss of over ₹540 million ($6.63m) to Indian investors. Source: Enforcement Directorate, India