Chinese company resorts to FEMA violation

ED seizes Rs. 12.25 crore during searches on Chinese owned Pigeon Education Technology

The Enforcement Directorate (ED) has seized Rs. 12.25 crore under Section 37A of the Foreign Exchange Management Act, 1999 in the case of Pigeon Education Technology India Private Limited.
The company provides online education in the name of Oda Class. ED searches against the company revealed that the company is 100 per cent owned by Chinese nationals and all the affairs of the company including financial decisions are taken by the persons sitting in China.
Investigation further revealed that the company has siphoned off Rs.82.72 Crore to China and Hong Kong, SAR, China on the pretext of advertising and marketing expenses on the instructions of Chinese director Liu Kan.
However, the company could not produce any proof of receipt of service on its part and proof of any advertisement published against the said expenses. Further, the director and accounts manager of the company have also admitted during investigation that the payments were made only on the instructions of Chinese director, Liu Kan.
The Chinese director told the Indian staff that the said advertisements were published through Google and Facebook, the ED said adding that no confirmation or invoice raised by these platforms has been submitted. Further investigation is under progress, ED officials said.