SEBI Moves Australian Federal Court in Rs 49,000 Crore Pearl Agrotech Scam
SEBI alleges PACL siphoned off $133 million by duping investors and investing the same in overseas assets.
In a bid to repay Pearl Agrotech Corporation Ltd.’s over five crore investors, market regulator Securities and Exchange Board of India filed an application before the Australian Federal Court on Thursday. The Australian court is already hearing investors who are seeking a freeze order on the company’s overseas assets.
The market regulator submitted documents pertaining to the money trail of $133 million that flowed from PACL to its Australian subsidiaries. SEBI has alleged that the company siphoned off money from “gullible” investors and used it to purchase overseas properties, according to the note prepared by the regulator to show the money trail, which has been accessed by BloombergQuint.
Pearl Agrotech’s Properties in Australia
- One villa in Melbourne under NS Bhangroo’s daughter’s name. Bhangroo is founder and chief of the company
- Sky Lounge Hotel Apartments in Melbourne
- 3-4 town houses in Melbourne
- Gold Coast resort
Sources
Between 2009 and 2014, PACL allegedly siphoned off Rs 631 crore to Australia through its subsidiary Pearl Infrastructure Projects Ltd, according to the SEBI note.
“PACL adopted two methods to siphon off money. Out of the total amount of Rs 657 crore received into PIPL’s account from PACL’s account, $132.99 million were remitted to the accounts at Australia under the automatic route under RBI guidelines,” reads the note seen by BloombergQuint.
PACL’s subsidiaries bought Sheraton Mirage in Gold Coast for $62.8 million and a luxury home for $4.95 million in 2011. Sheraton Mirage was sold in July for $140 million but the Australian Federal Court froze the sale after appeals filed by investors. Investors have pleaded for the appointment of a receiver for PACL’s assets.
The Australian Federal Court on July 19, in response to the appeals, granted an injunction against $92 million realised from the sale of PACL’s overseas assets, Pratap Venugopal, SEBI’s counsel had told the Supreme Court earlier.
Lawyers representing investors in the Australian Federal Court said on Thursday that the court has extended the injunction order to August 29 after hearing SEBI and investors earlier in the day. The court is yet to decide on whether to grant investors’ plea for injunction against total amount of $140 million.
SEBI had earlier moved the Supreme Court against PACL in July 2016, alleging that the company siphoned off $98 million in Australia. Subsequently, the apex court issued notices to the Centre on the market regulator’s plea seeking the Australian government’s assistance. SEBI and officials of the ministry of home affairs then met to discuss how both governments can use each other’s help.
Australian authorities have since assured assistance in the case, a highly-placed source in SEBI told BloombergQuint. He did not wish to be named as these are ongoing cases and the market regulator is yet to conclude its talks with the Australian and Indian governments.
The Supreme Court had appointed a panel led by former Chief Justice of India, Justice RM Lodha, in February this year, to oversee and permit sale of PACL assets. The panel is also overseeing the refund of Rs 49,000 crore by the company to its investors, as ordered by SEBI.
The case relates to PACL duping over five crore investors through its collective investment scheme (CIS) that was held illegal by SEBI. In August 2014, the market regulator had asked PACL to wind up the scheme and refund investors. This order was challenged by PACL in the Securities Appellate Tribunal which in 2015 upheld SEBI’s order.