1 May 2002

AMITABH BACHCHAN GETS NOTICE FOR FERA VIOLATION

From Jal Khambata

NEW DELHI: Superstar Amitabh Bachchan has fallen in the FERA (foreign Exchange Regulation Act) net and accused of siphoning off US $6 lakhs (Rs 2.70 crores) from the earnings of the "Miss World" pageant he organised in Bangalore in 1996. He has been charged with contravention of Section 16(1) of FERA.

A show-cause notice was issued to him as the Chairman of the Mumbai-based Amitabh Bachchan Corporation Limited (ABCL) on Monday asking him to explain "within ten days" as to why he should not be booked and proceeded with under Section 50 and 51 of FERA as well as under Sections 49(3) and 49(4) of the Foreign Exchange Management Act (FEMA).

The Enforcement Directorate has been investigating the foreign exchange fraud for quite long but it decided to hurry up with the notice in view of the fact that FERA is lapsing this month end and is to be succeeded by a less punitive FEMA from June 1. The stringent actions possible under FERA would not have been possible after it lapses.

An identical notice has also gone out to ABCL's Chief Executive Officer Sanjiv Gupta for the contravention of FERA, the Enforcement Directorate sources said. Amitabh and Bachchan were "in charge and responsible" for the conduct of ABCL's business, the sources said.

They pointed out that ABCL had entered into an event management agreement for organising the "Miss World" 1996 Pageant with Messrs Marketing and promotional Service Limited, a company incorporated in Channel Islands, known as a tax heaven. The said company has the registered office at 51, Bath Street, St Helie Jersey JE4 OXP, Channel Island.

In terms of Clause 9.2 of the Agreement, ABCL was supposed to receive US $6,00,000 from MPL of Channel Island as the event management fee, but it has not received the amount even after six years of completion of the event. Since the event was held in India,

ABCL should have deducted its fee before transmitting the earnings to the foreign firm. The mandatory permission of the Reserve Bank of India (RBI) required for the foreign exchange transfer was also not obtained by Amitabh Bachchan's company, the sources added.

Only a few months ago, the same ABCL was in the news for being forced to pay off huge sum to Doordarshan as royalty for certain programmes. Samajwadi Party General Secretary Amar Singh had come to the rescue of his friend Amitabh Bachchan to save him from a criminal prosecution and seizure of his properties by persuading Doordarshan to get back the money, without interest, in three installments. Amitabh has paid off the money but he is yet to pay the interest that had accrued on account of his default.

Since it is an old case ripped open now, the BJP-led NDA Government may be accused of carrying out a political vendetta against Amitabh Bachchan for helping out the Samajwadi Party of Mulayam Singh Yadav in the Uttar Pradesh Assembly elections early this year. END