ED Raids Rajesh Exports Over Rs 15 Lakh Crore Fraud

The Enforcement Directorate has executed coordinated raids on gold exporter Rajesh Exports Limited across multiple cities. This federal action follows intensifying regulatory scrutiny into a massive financial discrepancy scheme, highlighting severe corporate governance failures and suspected cross-border capital flight within India’s gems and jewellery sector.

Federal Enforcement Actions Target Precious Metals Giant

The Enforcement Directorate on Tuesday carried out searches at nine premises linked to gold exporter Rajesh Exports Ltd in Bengaluru and Mumbai as part of an investigation into alleged financial irregularities, with preliminary findings pointing to suspected benami share transactions, a significant mismatch in gold inventory, and questionable overseas dealings.

According to sources, investigators have uncovered evidence suggesting multiple transactions in Bengaluru-based Rajesh Exports’ shares via alleged benamidars, through which more than $20 million may have been siphoned out of the country.

The searches also revealed a major discrepancy in the company’s gold holdings, with the physical stock of the metal found during the operation allegedly around 40% lower than the quantity reflected in the company’s books of accounts, sources said.

The latest action comes days after the Securities and Exchange Board of India issued an interim order accusing Rajesh Exports of inflating revenues by about Rs 15.15 lakh crore between FY21 and FY25 and barred the company and its promoter-chairman Rajesh Mehta from dealing in securities pending further investigation.

Apart from the findings emerging from the searches, the Enforcement Directorate is examining several transactions involving overseas entities and gold imports.

Investigators are scrutinising the adjustment of around Rs 3,000 crore in trade receivables against gold imports whose delivery is considered suspicious. Officials are examining whether the imports were genuine and whether the transactions were used to conceal movement of funds.

The agency is also probing outward direct investment of more than Rs 1,000 crore that Rajesh Exports is said to have made in African gold mining ventures. Sources said the purported investments do not appear in the books of accounts of any of the company’s subsidiaries, raising questions over the destination and utilisation of the funds.

Another area under examination involves the netting off of nearly Rs 3,000 crore worth of trade receivables and trade payables against four to five foreign entities based in the UAE. Investigators suspect these entities may have dubious credentials and are examining whether they were used to route transactions and obscure the actual movement of money.

The Enforcement Directorate searches add to the regulatory scrutiny the company is already facing after SEBI alleged that 97% to 99% of the revenues reported by certain overseas subsidiaries could not be independently verified and may have been linked to transactions involving foreign entities.

In an exchange filing after the SEBI order, the company said there was “no reason” for it to inflate revenues while maintaining earnings. The company said it was cooperating with the regulator and would provide all relevant documents to clarify its position.

Rajesh Exports, one of India’s largest gold exporters and owner of Swiss gold refiner Valcambi, has denied SEBI’s allegations. The company has maintained that its reported revenues are accurate and attributed the regulator’s concerns to what it described as a confusion between revenue figures and EBITDA numbers of its Swiss subsidiary.

Regulatory History and Corporate Background

The intensifying scrutiny by federal agencies marks a critical turning point for Rajesh Exports Limited, a dominant force in the global precious metals supply chain. As the parent company of Valcambi, one of the world’s largest precious metals refineries based in Switzerland, the Indian exporter commands significant market share.

The current joint pressure from market regulator SEBI and the anti-money laundering agency follows years of exponential balance sheet growth that has now drawn formal skepticism from state auditors regarding international trade declarations.

FAQs

Why did the Enforcement Directorate raid Rajesh Exports?

The agency executed the searches due to suspected financial crimes, including unauthorized overseas fund transfers exceeding $20 million, a 40% deficit in physical gold inventory, and suspicious accounting settlements tied to international trade.

What are the specific revenue inflation allegations against the firm?

The Securities and Exchange Board of India filed an interim order stating that the company fabricated approximately Rs 15.15 lakh crore in revenues between fiscal years 2021 and 2025, primarily through unverified transactions inside foreign subsidiaries.

How has Rajesh Exports responded to the investigations?

The corporation denied the accounting fraud claims in a regulatory filing, asserting that its financial tracking is completely authentic. Management attributed the regulatory discrepancies to a fundamental misunderstanding of the revenue and EBITDA structures utilized by its Swiss refining arm.

What penalties have been levied against management so far?

Capital markets regulator SEBI has barred Rajesh Exports Limited along with its promoter and chairman, Rajesh Mehta, from participating or trading in public securities markets while the comprehensive investigation remains ongoing.