2G Scam Engulfs UAE Based Company Etisalat

2G Scam Engulfs UAE Based Company EtisalatEnforcement Directorate issued a show-cause notice along with a penalty of Rs 7100 crores to Etisalat DB for violation of the Foreign Exchange Management Act (FEMA) under the 2G spectrum concern.

The company was charged with not intimating the authorities for receiving the funds from overseas and then investing the same after distributing Swan Telecom (now Etisalat) its share of 45%. As per agreement made on September 23, 2009, Swan Telecom issued 44.37% and 5.27% share to Etisalat and Genex Exim, respectively. The company was accused of showing arbitrarily high price of its stake in Genex Exim.

Etisalat has been notified for not complying with Section 6 (3) (b) of FEMA which lays strict guidelines for transfer of funds from outside India. The company was reportedly sold to Etisalat for the amount of Rs 3228 crores after acquiring UAS license in 2008 which was granted by the former Telecom Minister, A Raja.

The company has been asked to file its reply within a month’s time. The notice has raised a serious allegation on the UAE-based company which was washing its hands clean out of the 2G spectrum scam.