The Enforcement Directorate is the agency that investigates offenses related to money laundering. (Representative image)
The Enforcement Directorate (ED) has summoned Amazon India head, Amit Agarwal, next week over alleged irregularities in a deal with Future Group, CNN-News18 reported on Sunday.
“We are in receipt of summons issued by the ED in connection with the Future Group. As we have just received the summons, we are examining it and will respond within the given time frame,” Amazon said in a statement.
According to the sources, the federal agency has also summoned Future Group officials for the verification of documents and the evidence it has collected so far. The company did not respond to the queries till press time.
The ED is examining if Amazon violated India’s law on foreign exchange, or the Foreign Exchange Management Act (FEMA), when it invested Rs 1,431 crore to purchase a 49 percent stake in Future Coupons Pvt Ltd (FCPL) in 2019 and if it complied with regulations.
FCPL owns 9.82 percent stake in Future Retail Ltd (FRL). The deal allowed Amazon to not only indirectly hold a 4.81 percent stake in Future Retail, but also gave it effective veto power over the listed retail company. Amazon has been claiming controlling rights over Future Retail at various judicial forums and objecting to Kishore Biyani-led Future Group’s the sell-off plans, accusing it of breaching the investment pact.
Amazon and Future Group have been engaged in a rough battle after Future agreed to sell its assets to Mukesh Ambani’s Reliance Group on a slump basis for Rs 24,500 crore last year.
Previously, Delhi High Court observed that Amazon appeared to have indirectly obtained control over Future Retail without the approval of the government.
On November 16, the HC directed the Competition Commission of India (CCI) to rule on revoking its approval to the Amazon-Future Coupons deal within two weeks, the Confederation of All India Traders (CAIT) said in a statement.
This happened soon after the offline traders lobby CAIT filed a public interest litigation against CCI saying that the competition regulator had issued a showcause notice to Amazon in June, but has not taken a decision yet. It was earlier reported that CCI would meet Amazon and Future Coupons Pvt Ltd (FCPL) on January 4, 2022.
Independent directors of Future Retail Ltd have also written twice to CCI in the past few weeks seeking revocation of the nod given to the US giant’s 2019 investments into Future Coupons, a promoter group entity of Future Retail.
They accused Amazon of submitting “completely opposite information” while seeking approval from CCI which was “contradictory” to the US company’s own internal communications regarding its 2019 investments in Future Retail’s promoter company.
The CCI has been aware of the issue since March this year, and was looking at whether Amazon obtained the approval for its investment in FCPL in 2019 by telling lies to it, people familiar with the matter told Moneycontrol. Being prima facie satisfied, the CCI issued a show cause notice in June 2021 to Amazon and gave the company time until September to submit proof, they added.
In the meantime, independent directors at FRL submitted proofs from Amazon’s own internal emails to support their claims of false statements made by Amazon to CCI. However, CCI did not act on the matter for more than 235 days, which suited Amazon, according to the people familiar.
While CAIT obtained an order from the Delhi High court to dispose the mater within two weeks, Amazon tried to obtain a stay on the same via a Supreme Court order. However, they withdrew the petition and requested postponement of the November 24 hearing, said the people familiar. Although the hearing went on and Amazon’s counsel continued to participate, when his turn came, the counsel argued said they have not been given enough time by the CCI.
Amazon walked out of the hearing, perhaps not having an answer to the incontrovertible evidences against the company, according to the people familiar with the matter.