Sunday, Jun 26, 2022
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Smoke-Rings Unlimited

As tobacco giants hotfoot into India, a showcause for FERA-dodging slows ITC

Smoke-Rings Unlimited
Smoke-Rings Unlimited
outlookindia.com
-0001-11-30T00:00:00+05:53

THINGS are not going right for ITC chairman Y.C. Deveshwar. Just when he appeared to have won the battle of attrition against its British parent BAT, with the latter reportedly agreeing to have its brands in India manufactured by ITC, comes the showcause notice from the Enforcement Directorate (ED) for the alleged FERA violation of $110 million (Rs 400 crore). This is the newest development in the largest FERA case in Indian business history, which began last October with the ED making a series of raids and arrests, including of two former ITC chairmen and several past and present directors.

While the notice was not unexpected—it was bound to be issued at some point of time—what has come as a bombshell is that for the first time in Indian corporate history, non-executive directors, including nominees of financial institutions (FIs) and BAT, have also been served notices along with Deveshwar and the executive directors as well as three former directors. The ED claims that, under Section 68(1) and (2) of FERA, it has the right to prosecute any person who connived or consented to a FERA violation, and also if his negligence caused or assisted in the violation by others.

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