Major Tory donor and Indian rice magnate, Karan Chanana, is being investigated over allegations of fraud and money laundering, reported The Guardian.
He faces probe in India over claims that tens of millions of pounds of bank loans were unlawfully diverted into shell entities. However, the tycoon has not responded to the claims.
Chanana, the head of the global rice brand Amira, has donated more than £220,000 to the Tories through his British company Amira G Foods since September 2019, the Guardian reported last year.
His firm Amira Nature Foods is domiciled in the British Virgin Islands (BVI) with its headquarters in Dubai.
According to the report, Tories face calls to freeze the money donated by Chanana, pending an inquiry.
The enforcement directorate in India said it conducted search operations on 2 May at 21 locations in the country connected to Chanana, the Indian company Amira Pure Foods and other parties.
According to the agency, searches were carried out under India's Prevention of Money Laundering Act, resulting in the seizure of around £100,000 worth of Indian currency. As of now, no charges have been filed.
In a statement, the enforcement directorate said: “Investigations revealed that the accused entities in connivance with each other as well as other related/unrelated entities have illegally diverted loan funds sanctioned by the consortium of banks by way of transferring loan funds into the accounts of various shell entities under the guise of genuine business transactions.
“It was also known that Karan A Chanana had donated to a political party of [the] United Kingdom since 2019 … while the accused entity had itself defaulted on repayment loans.”
Chanana, 50, turned a family business founded in 1915 into a major international producer of Indian speciality rice. The firm has specialised in Indian basmati rice, grown in the foothills of the Himalayas.
As per corporate filings, his company Amira Nature Foods was publicly listed on the New York Stock Exchange in October 2012. The company had subsidiaries named Amira Pure Foods in India, which is currently under investigation, and Amira G Foods in the UK.
The UK company show net liabilities of £5.96 million and is being supported financially by the parent company.
Amira Nature Foods was delisted from the New York stock exchange in August 2020 after it missed deadlines for filing financial information.
A consortium of banks, headed by India’s Canara Bank, filed an information report with India’s Central Bureau of Investigation in November 2020 alleging bank fraud.
Amira Pure Foods, along with Chanana and other directors, have been accused of engaging in fraud loan transfers to shell companies from 2009 to 2018. These actions allegedly resulted in bank losses exceeding £116m. Currently, Amira Pure Foods in India is undergoing liquidation.
The enforcement directorate said it initiated its investigation based on the information report filed by the banks.
Margaret Hodge, the Labour MP and chair of the all-party group on anti-corruption and responsible tax, has called on the Tory party to identify the source of the funds donated by Amira and to freeze the money until investigations are concluded.
Recently, the BBC and the Evening Standard reported that they had successfully obtained the right to disclose the name of a Tory donor whose foreign companies were linked to a global money-laundering case. The donor, Javad Marandi, has denied any wrongdoing and is not facing criminal sanctions.
This case prompted an urgent parliamentary question by Alison Thewliss, a Scottish National Party MP, regarding its implications. Chris Philp, the minister for crime, policing, and fire, responded that the government could not comment on ongoing law enforcement investigations.
The Electoral Commission recommended the government to enhance controls and verification processes to prevent foreign funds from being used in UK politics.
A spokesperson for the Tory party emphasised that they only accept donations from permissible sources, which include individuals registered on the UK's electoral roll or UK-registered companies.
Donations are declared transparently to the Electoral Commission, openly published by them, and fully comply with the law, the spokesperson added.
