The Directorate General of Foreign Trade (DGFT) on Monday said that it would examine cases for referral to the Central Bureau of Investigation (CBI)/Economic Offence Wing (EOW) after taking action under the Foreign Trade (D&R) Act if wheat exporters are found to be using back-dated Letters of Credit (LCs) to get permits. It also made a two-step approval process for export permits of wheat, besides undertaking physical verification of all approved LCs.

On May 23, DGFT said that it was informed that fraudulent backdated LCs showing the date of issuance as on or prior to May 13 were being submitted by some unscrupulous exporters for the issue of RCs. But it also found that in such cases, the message exchange date between Indian and foreign banks and Swift messages was after May 13, whereas both (LC and message) should be on or prior to the date of ban.

“In cases where the LC date is on or prior to May 13 but the swift message/message exchange date between an Indian bank and a foreign bank is after May 13, regional authorities (RAs) may conduct a full investigation (if required, through external experts) and if these (messages) are found to be ante-dated, immediate proceedings under the FT (D&R) Act, 1992 need to be initiated against the exporter. Such cases will be further examined for referral to enforcement agencies like EOW and CBI. In case of complicity of any Banker in cases where ante-dating is established, necessary proceedings as per law will be initiated,” DGFT said in a notice.

‘Maintain due diligence’

The DGFT has also asked all its RAs to maintain due diligence and comply with all the guidelines in issuing permits (in the form of registration of contracts) for allowing wheat export. The DGFT has also asked them to send all valid registration of contracts (RCs), after physical verification of LCs, to an official panel constituted for the purpose. Two additional director generals of DGFT will check and approve all the valid proposals sent by RAs, who were until now authorised to issue permits to the exporters.

The foreign trade regulator also said that all RAs will have to do “physical verification of all LCs, whether already approved or under process” and they are allowed to take the help of a professional agency if required. While doing physical verification, validation/endorsement by recipient banks may be ensured, DGFT said.

The trade notice has been issued as the government believes that some of the exporters are applying for RCs based on “improper documents” despite strict guidelines issued to the RAs before issuing the permits. Customs authorities have been earlier directed by DGFT to allow the shipment of only those exporters who have valid RCs issued by RAs. Even digital RCs were dispensed with manual documents to prevent misuse of the system.

BusinessLine earlier reported that DGFT has received export permits worth 5.2 million tonnes (mt), out of which 60 per cent could be back-dated LCs as per a random check. However, many exporters said that the government should allow genuine orders received before the ban, even though LCs could not be placed before banks as advance payment had already been received by them to purchase wheat.

The all-India weighted average of mandi prices was ₹2,073/quintal on May 30, while the day’s arrivals were about 52,500 tonnes till 7 p.m. The price was changed from ₹2,079/quintal last Friday. On the day of the export ban, wheat was ₹2,132/quintal.

Meanwhile, the government’s wheat procurement has reached 18.46 million tonnes (mt) with an MSP value of ₹37,192.07 crore as on May 29, in which 17.50 lakh farmers got the benefit of MSP, the Food Ministry said.