ITC - The FERA Violation Story



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ITC in Trouble

In October 1996, officials of the Enforcement Directorate1(ED), Customs and Department of Revenue Intelligence (DRI) conducted raids on the various establishments of tobacco to hotels major ITC in Kolkata. The raids were conducted because the ED suspected ITC of having contravened FERA regulations2 to the tune of $100 million.ED sources claimed to have found conclusive documentary evidence of FERA violations by ITC from the raids.

Following this, on October 30th, 1996, ED officials arrested R. K. Kutty, Director and head of ITC subsidiary International Business Division (IBD), G. K. P. Reddi, former IBD Director and Chairman, E. Ravindranath, former IBD Vice-President, Operations, IBD, and M. B. Rao, former export manager, IBD. The arrests were made under section 35 of FERA, to conduct interrogations on FERA violations by ITC in international trading deals during 1991-95. All the arrested officials were remanded to judicial custody until November 13th, 1996...

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ITC in Trouble Contd...

On 31st October 1996, former Chairmen of ITC Ltd. (ITC), J.N. Sapru (Sapru) and Krishen Lal Chugh (Chugh) were summoned to the ED's office in Kolkata for interrogation. They were arrested the same day. On November 5, 1996, the ED interrogated ITC Chairman, Y.C. Deveshwar, who promised to submit a complete report on alleged FERA violations. By mid November, the ED arrested a few more ITC executives taking the total number of arrested officials to 15.By June 1997, ITC's board of directors was facing prosecution on account of allegations of FERA contravention. An ED official said, "For the first time in Indian corporate history, the entire board of directors of a company has been held liable for irregularities."

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