New Delhi, Jun 23 (PTI) The Enforcement Directorate on Tuesday conducted searches at multiple locations against Rajesh Exports, a gold refining and jewellery manufacturing company that has come under enhanced scrutiny following Sebi's allegation of a massive financial fraud.

Officials in the central agency said nine premises linked to the Bengaluru-headquartered company were searched under the provisions of the Foreign Exchange Management Act (FEMA). The premises are located in Bengaluru and Mumbai, they said.

A response from the company on the ED action is awaited.

Founder and Chairman of the company Rajesh Mehta recently denied any fund diversion or wrongdoing during an interview with PTI. He said that the company will fully cooperate with the fresh forensic audit ordered by the Sebi and not challenge the market regulator's interim order against it.

The ED, according to officials, is probing possible contraventions of the foreign exchange law FEMA, including allegations of multiple transactions of Rajesh Exports Ltd (REL) shares by benamidars (a person or entity in whose name a benami asset is transferred).

ED officials alleged that more than USD 20 million was siphoned out of the country and that there was a 40 per cent "mismatch" in gold stock inventory of the company from what was declared in the account books.

The agency said it was examining if about Rs 3,000 crore of trade receivables were set off against "fictitious" gold imports, delivery of which was "suspicious".

The ED is also probing if the company ostensibly invested more than Rs 1,000 crore in African gold mines, as the said investment was "not reflected" in the books of accounts of any of its subsidiaries.

Another charge being investigated by the ED is that around Rs 3,000 crore of trade receivables and payables have been set off against 4-5 foreign entities with "dubious" credentials.

Trouble began for Rajesh Exports after the Sebi recently alleged that the company had a suspected consolidated revenue inflation of up to Rs 15.15 lakh crore for the 2020-21 to 2024-25 fiscal years.

Sebi, in an interim order dated June 3, held that REL allegedly inflated its consolidated revenue over five years by attributing massive revenues to overseas subsidiaries, particularly Switzerland-based Valcambi SA, despite the subsidiary's audited standalone financial statements showing only a fraction of those amounts.

The regulator raised serious concerns over misrepresentation of the company's financial position, noting that almost the entire of REL's reported revenues were attributed to overseas subsidiaries whose financial statements were not made publicly available.

Sebi directed REL to cooperate with the investigating authority, submit requisite documents and explanations within 30 days and make true and fair disclosures in its financial statements, related-party transactions and other filings. It also barred Mehta from buying, selling or dealing in the company's own securities pending further proceedings.

Mehta denied any manipulation in revenue figures. "If anybody wants to inflate, they will inflate their bottom line. They will inflate their profit to get some benefits. If they have alleged or observed an inflation of top line, which is absolutely no use for anybody," he had told PTI.

Mehta said the company had already submitted 300-400 gigabytes of documents to Sebi but believed the watchdog had been unable to locate the correct files, adding that they would re-submit all sought documents to resolve the matter. PTI NES LUX RT RT

Foreign exchange law scrutiny over alleged benami share transactions, suspicious gold imports, and undeclared overseas investments. Foreign exchange law scrutiny was initiated through searches at multiple premises linked to a gold refining and jewellery manufacturing company on the basis of suspected contraventions under FEMA. The enquiry concerns alleged multiple transactions in the company's shares through benamidars, possible siphoning of foreign exchange out of the country, a reported mismatch between declared and recorded gold inventory, and the use of purportedly fictitious gold imports and suspicious deliveries to set off trade receivables and payables. The investigation also extends to alleged investments in African gold mines that were not reflected in the books of subsidiary companies, and to dealings with foreign entities described as dubious in character.