April 8, 2011
ADM investigated by Indian government for violating investment norm
The US-based agro products giant ADM (Archer Daniels Midland) is facing a government probe in India on allegations of manipulating the investment norms set out by Foreign Investment Promotion Board (FIPB) of the Ministry of Finance.
The Economic Offences Wing (EOW) of Delhi Police has accused ADM, through its Mauritius-based subsidiary ADM Interoceanic Ltd, of wrongfully obtaining FIPB endorsement for further investments in India and to perform agro-based businesses through another company ADM Agro Industries.
"It has been found that the requisite approval from FIPB was wrongfully procured by the alleged foreign company without requisite no-objection certificate from its joint venture partner, Tinna Finex Ltd," EOW said in its March 25 status report to the Delhi high court.
ADM operates in India through a joint venture company Tinna Oils & Chemicals Ltd, where ADM Interoceanic has a 75% stakeholding and Delhi-based Tinna Finex Ltd holds the other 25% stake. In accordance with current investment rules, ADM had to procure a no-objection certificate from its JV partner Tinna Finex before trying to obtain FIPB approval as nature of businesses planned to be carried out by ADM Agro Industries were similar to Tinna Oils & Chemicals.
Tinna Oils is in the business of seeds procurement, edible oil extraction, production, storage and sale of de-oiled cakes, among others.
The EOW said ADM Interoceanic faked the minutes of board meeting of Tinna Oils and Chemicals and deceived the FIPB. The EOW registered a case against two directors of Tinna Oils, who are nominees of ADM, and said that the accused cheated not only the minority shareholders, but also Foreign Investment Promotion Board (FIPB).
The Illinois headquartered ADM reported net revenues of US$61.7 billion for 2010.