The Enforcement Directorate(ED) raided Singapore based firm Sequoia Capital’s Bangalore office on late Monday night which was part of Chennai based Vasan Healthcare’s investigation, a company that Sequoia has funded.
The search was done regarding the Aircel Maxis Scam.
The ED and the Crime branch of India started investigations into Aircel-Maxis a part of 2G scam and a firm co-owned by former finance minister P Chidambaram’s son Karti Chidambaram.
Multiple government agencies had been investigating into numerous deals undertaken by Karti Chidambaram and established that Sequoia Capital was allegedly “roped in” for misuse of the foreign direct investment policy.
Talking about the development, Mohandas Pai of Aarin Capital said that rather than conducting a raid at the Sequoia Capital office the ED should have issued a notice and asked for the information directly before proceeding for a raid.
Karti Chidambaram is alleged to have used Vasan Healthcare to launder black money.
“I have no idea about the company (Sequoia Capital) that you’re mentioning. And I can’t comment anything about it,” Chidambaram said on Tuesday.
Sequoia confirmed the raid. In a statement on Tuesday, the investment firm said,
“Sequoia Capital India has fully supported the regulatory investigation, has adopted a policy of complete transparency and full compliance with that investigation, and continues to dutifully respond to all inquiries received to date. During the course of this investigation, the Sequoia Capital India team has met ED officials multiple times and has answered every query placed before us. We adopted the same approach yesterday during the ED visit to our offices.”
In February 2009, Sequoia invested Rs 50 crore in Vasan Healthcare and in October 2010, the venture capital firm reached out to Advantage Strategic Consulting Pvt. Ltd—a firm in which Karti Chidambaram was director —to buy out its equity stake in the company.
Advantage sold a partial stake (30,000 of the 150,000 shares it held in the company) to Sequoia at Rs 7,500 per share—a significant premium, considering that Advantage had acquired the shares at Rs 100 a piece.
The ED is trying to verify these allegations and to determine how was such a low price per unit of share facilitated. This has put Advantage under the Enforcement Directorate scanner for suspected foreign exchange violations.
ED and CBI are probing the Aircel-Maxis deal. It is a part of the overall probe in the 2G scam case.