ED Probe Reveals Rs 3,000 Cr Opaque Deals, Missing Records at Rajesh Exports

The Enforcement Directorate (ED) launched extensive search and seizure operations on June 23 and 24, 2026, at nine premises linked to Rajesh Exports Ltd (REL) in Bengaluru and Mumbai. The investigations are part of an ongoing probe into suspected contraventions of the Foreign Exchange Management Act (FEMA), 1999. These raids have uncovered a range of serious financial irregularities, painting a concerning picture of the gold refiner and jewellery manufacturer's operations. One of the most significant findings by the ED is the identification of approximately Rs 3,000 crore in 'opaque trade set-offs' or suspicious foreign trade transactions. The agency alleges that Rajesh Exports was engaged in 'setting off of trade payables and trade receivables from suspicious foreign parties based in the UAE and other overseas jurisdictions.' The legitimacy and purpose of these substantial transactions are currently under intense scrutiny. Furthermore, the ED has highlighted a critical absence of crucial documentation. Rajesh Exports allegedly 'failed to produce documentation in respect of its foreign transactions, including its imports, exports, overseas investments and the settlement of foreign trade receivables and payables.' This lack of records has made it 'almost impossible' for the agency to verify the genuineness of these transactions. As an example, the ED cited a purported investment of Rs 1,035 crore (or over Rs 1,000 crore) in African mining assets, for which the company could not provide contemporaneous records or supporting documents during the searches. Physical verification during the raids also revealed a substantial discrepancy in the company's gold inventory. Investigators reported a '40% stock mismatch,' indicating that the physical stock of gold found at the premises was significantly lower than the quantity recorded in the company's official books. This raises serious questions about inventory management and potential misreporting of assets. The probe extended to allegations of share manipulation, with the ED claiming that more than Rs 600 crore was allegedly siphoned out of India through suspicious block trades in Rajesh Exports shares, executed using NRI benamidars (proxy holders). The agency noted that some individuals involved in these transactions also appear in disclosures released by the International Consortium of Investigative Journalists (ICIJ), suggesting possible undisclosed offshore links that are now being examined. Adding to the list of unusual findings, the ED flagged peculiar remuneration patterns within Rajesh Exports' key management personnel. Despite the company reporting an astronomical consolidated revenue of approximately Rs 7.7 lakh crore, the Chief Financial Officer (CFO) has reportedly not received any salary since 2020, while the Managing Director (MD) was allegedly paid only about Rs 17,000 per month. The ED described these 'unusual remuneration patterns' as inconsistent with the scale of the company's operations and a 'departure from normal commercial practices.' These ED actions follow closely on the heels of an earlier investigation by the Securities and Exchange Board of India (SEBI). In an interim ex-parte order issued prior to the ED raids, SEBI had alleged 'large-scale financial misrepresentation, fund-routing irregularities, and failures in corporate governance' at Rajesh Exports. Specifically, SEBI suspected that the company had misrepresented approximately Rs 15.15 lakh crore in revenue over a five-year period, from FY21 to FY25, which amounted to nearly its entire reported revenue during that timeframe. Consequently, SEBI had barred Rajesh Exports and its promoter, Rajesh Mehta, from accessing the securities market pending further investigation. Rajesh Exports, through its chairman Rajesh Mehta, has publicly refuted SEBI's allegations, stating that the reported revenues are accurate and that the discrepancy might stem from a 'mix-up between Ebitda and revenue numbers' at its indirect subsidiary, Valcambi SA. Following the ED searches, Rajesh Exports issued a regulatory filing on June 26, 2026, confirming that the searches concluded on June 25, 2026, and asserted that 'no discrepancies were found in inventory or cash' and 'no items were seized.' The company emphasized its full cooperation with the authorities. The ongoing investigations by both the ED and SEBI highlight significant regulatory scrutiny on one of India's largest gold exporters. The findings from the ED's preliminary probe, as reported by various media outlets, suggest a complex web of alleged financial impropriety, missing documentation, and unusual operational practices, which could have substantial implications for the company and its stakeholders. The contrasting statements from the ED regarding its findings and Rajesh Exports' subsequent denial of discrepancies indicate that these matters are likely to undergo further legal and regulatory examination.

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