The Supreme Court has stated in a ruling that a JPMorgan Chase & Company unit violated India’s foreign investment rules and helped property developer Amrapali Group divert funds from realty projects.
The court has ordered the Enforcement Directorate to investigate the Noida-based Amrapali Group, for diverting funds overseas with the help of JPMorgan and others, under the Prevention of Money Laundering Act (PMLA).
Incidentally, a forensic audit has revealed that violations range from disregarding foreign investment norms, paying dividend without generating profits, setting up fake companies and overvaluing shares.
However, JPMorgan will be allowed to seek a review of the ruling and any criminal charges will only be filed in a lower court after investigation is completed.
Earlier, developers like Amrapali, Jaypee Infratech Ltd and Unitech Ltd were taken to courts by homeowners and creditors.
Incidentally, JPMorgan had invested around Rs 850 million in an Amrapali Group company’s shares and sold them to an office boy and nephew of the auditor for Rs 1.4 billion, according to the Supreme Court.
The Supreme Court also ruled that Amrapali’s shares were overvalued for making payment to JPMorgan and it was adopted as a device to siphon off home buyers’ cash abroad.
The Enforcement Directorate is expected to conduct a thorough examination of the Amrapali Group to find if their assets could be attached.