Mumbai: The Enforcement Directorate (ED) on Wednesday carried out searches at five locations in Mumbai, including offices and premises linked to Eros International and its associated entities, as part of its probe into alleged fund diversion and financial irregularities by the Eros Group. During searches various incriminating documents pertaining to overseas entities, immovable properties, overseas bank accounts and digital devices have been found and seized.

The agency carried out searches under the provisions of Foreign Exchange Management Act (FEMA).

ED has commenced investigation on the basis of Securities and Exchange Board of India (SEBI) investigation against EROS group and its promoters for alleged misrepresentation of financials and diversion or siphoning of funds amounting to around Rs 2,000 Crore. Eros International stands accused of inflating financial statements through fictitious transactions masked as content advances

The main entity of EROS group is 'Eros International Media Ltd.', which is an Indian motion picture production and distribution company and a key player in the Indian film industry,engaged in film production, co-production, acquisition, and distribution of Indian films in multiple formats worldwide, including theatrical releases, television syndication, and digital platforms.

ED claimed to have gathered evidence which indicates the modus operandi identified in the diversion of funds.

During the investigation "It has been found that EROS paid approximately Rs 2,000 Crore as content advances to certain entities between FY 2012-13 and FY 2020-21. es. However, a substantial portion of these dues was later written off by Eros, purportedly due to non-recovery during the Covid-19 pandemic, as a part of a balance sheet cleaning exercise," the financial probe agency stated on Friday.

In this manner, EROS had devised a scheme to inflate its financial statements by paying content advances, which were later diverted or round-tripped back to the company, with fictitious movie rights purchases used to hide the true nature of these transactions, the anti-money laundering agency added.

Despite multiple attempts, the company remained unavailable for comment.

In June 2023, SEBI found evidence suggesting that Eros International's financial statements were overstated and did not present a true and fair view of the company's financial health. Consequently, SEBI barred the company's Managing Director, Sunil Arjan Lulla, and three associated entities from the securities market. Following SEBI's findings, the Ministry of Corporate Affairs ordered an inspection of Eros International's accounts to investigate allegations of fund siphoning. The ED's recent searches are part of this ongoing investigation into the company's financial practices.