Investigating the Volcker allegations in the oil-for-food scandal, the Enforcement Directorate has been drawn into a parallel probe that, in its scale of alleged violations, may turn out to be far bigger than the Iraqi payoffs.

As reported first by The Indian Express, NRI businessman Aditya Khanna has been identified as the main beneficiary of the Volcker payments, along with Andaleeb Sehgal (close friend of Natwar Singh’s son Jagat Singh), named by Paul Volcker in his UN report.

But while scrutinising companies which were allegedly used to route the oil-for-food pay-offs to the beneficiaries, particularly one named Indrus located in Jersey in the Channel Islands, the ED has located an entire web of offshore companies linked to the Khanna family, from where huge illegal foreign exchange remittances to India have allegedly been traced.

What makes this significant is that the ED has recently informed the Ministry of Defence (MoD) that there is evidence which indicates that these very companies were dealing in arms purchases and subsequently routed money in a ‘‘disguised’’ form to India.

Some of the companies under probe are South Asian Properties, New Haven Limited and Leaderwick. Sources told The Sunday Express that the probe now involves the ownership pattern and transactions of these companies in the Channel Islands and even the Isle of Mann.

Top Government sources confirmed that a ‘‘definite’’ arms link has been unearthed in these transactions and that the MoD was informed about the developments ‘‘at the relevant time.’’

The ED asked the administrator of Channel Islands for ownership details and later went to London to collect papers from the British Serious Fraud Office.

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