Two days after it issued show-cause notices in the Iraqi oil-for-food scandal, the Enforcement Directorate today began its second and, in terms of quantum of violations, bigger action against persons linked to the scam.

The ED issued the first in what appears to be a bulky bunch of show-cause notices to Vipin Khanna and his sons, NRI businessman Aditya Khanna, Congress MLA Arvind Khanna and his brother Navin Khanna.

In all, 17 persons and companies are named in the first show-cause notice, with violations of $2.1 million (Rs 9.6 crore) listed mainly against Congress MLA Arvind Khanna and a clutch of companies with which he is associated.

The ED’s action is significant since agency sleuths have a strong suspicion that unaccounted foreign exchange remittances traced will be well above Rs 50 crore and have been earned by the Khanna kin from their dealings in the arms and ammunition business.

It is to be recalled that following ED’s advisory, the Ministry of Defence last month blacklisted companies owned by the Khanna family and advised Government departments not to have official dealings with them.

The ED is now set to inform other investigating agencies of the Government — namely the Foreign Contribution Regulation Act, the Central Bureau of Investigation and the Income Tax Department — about the extent of alleged foreign exchange violations and the fact that the source of the funds remained unexplained.

The Indian Express has learnt that when ED sleuths travelled to London to unearth the source of the funds and the ownership of the dozens of off-shore companies run by the Khannas, they received copies of correspondence which categorize them as arms and ammunition dealers.

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