S Ramalingam, the Tamil Nadu-based trader caught by the Income Tax Department with US treasury bonds estimated at Rs 27,000 crore ($5 billion), was a member of a commodity exchange, according to officials familiar with the matter.
"The person is a member of a commodity exchange from Dharapuram in Tamil Nadu," said an official.
Following a tip-off by the Financial Intelligence Unit, Ramalingam's house and office were searched by the I-T department.
Though marred by the recent financial crisis, US treasury bonds, issued by the government of that country, are considered the world's most secure paper instruments.
While I-T officials declined to comment, a senior police officer said the raid was carried out by Indian Revenue Service officials. When contacted, Ramalingam told Business Standard, "I was holding international bills of exchanges and bonds worth $5 billion. The department has given a receipt for those documents."
Ramalingam, who has rented his place to a petrol station, reportedly planned to use the money to set up a crude oil refinery, investing about Rs 1.5 lakh crore, in collaboration with a foreign investor. It was a project report describing the plans to set up the plant in Thondi (a port town in the Ramanathapuram district) sent to the Union government that triggered the raid, claimed the aspiring oil baron.
Ramalingam declined to share details on how he came to possess these bonds. "Till the time this issue (the probe by the I-T department) is over, I will not be able to share anything," he said. He was, however, confident he would "come out clean".
About 25 officials from the I-T department (from Chennai, Mumbai, New Delhi, Kochi and Bangalore) are said to have searched Ramalingam's house and banks in which he held accounts. The documents seized have been sent to the US Embassy in New Delhi for verification.
A senior official who claimed he had seen such hauls earlier, said, "The bonds are most likely to be fake. I have come across such bonds in millions and billions of dollars. Eventually, they will be worth nothing." Under foreign investment rules, individuals are allowed to invest up to $200,000 outside the country. On repatriation, any such investment in movable assets abroad has to be converted into rupees.