New Delhi/Bengaluru: The Enforcement Directorate (ED) on Friday seized Rs 8.26 crore funds of a Bengaluru-based online education company that is fully owned and controlled by Chinese nationals. The company had siphoned off its funds to China and Hong Kong by bypassing Indian regulations, ED officials said.
The education company, named Pigeon Education Technology Private Limited was conducting an online course under the brand name "Odaclass". It has been charged of alleged violation of the Foreign Exchange Management Act (FEMA). "The funds of Pigeon Education Technology Private Limited have been seized under Section 37A of the FEMA", the ED said in a statement.
Last month, the ED conducted searches at a few locations in Bengaluru and found that Chinese nationals have 100 per cent ownership rights of the company and all its dealings, including financial decisions, are taken by people who are based in China. During investigation, the ED found that the company ignored Indian regulations and siphoned off Rs 82.72 crore to China and Hong Kong by citing fake advertisement and marketing expenses. Also, it was found that the transfer was done as per the instruction of the company's Chinese director Liu Can, ED officials said.
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When the company was asked to produce evidence against its claims of advertisement and marketing expense, it failed. Also, it could not provide either proof of receipt of service or proof of any advertisement published against the said expenses, ED said. When questioned, the director and accounts manager of the company Vedanta Hamirwasia claimed that the payment was made only on the instructions of Can, the ED said.
Hamirwasia said that the Chinese director had told them that the advertisements were published through Google and Facebook. However, when asked for proof, the company could not submit any confirmation or invoice that was raised by these platforms, officials added. ED officials said that it has been found that though the company had Indian heads but decision on all matters including finance and operation were taken from China.
