New Delhi, July 2: The Enforcement Directorate (ED), which probed the Indian angle of the Volcker report on the Iraqi oil-for-food scandal — it led to the resignation in 2006 of then External Affairs Minister K Natwar Singh — to uncover the money trail of mega arms deals and illegal fund transfers to India, got its first adjudication order in the case last week, resulting in the imposition of Rs 15 crore as penalty on members of the Khanna family and their companies in India.

The Khannas have been named by the ED as principal players in the oil-for-food scandal with Aditya Khanna, son of arms dealer Vipin Khanna, alleged to be the main facilitator for the deal.

The adjudication proceedings began after the Khannas were served five show-cause notices by the ED last year. The Rs 15-crore penalty has been calculated for just one show-cause. Adjudication proceedings continue for the other notices. The penalty has to be paid within 45 days.

The adjudication order states that during the Volcker report investigations, the ED traced eight trusts/companies incorporated by the Khannas in tax havens like Channel Islands, Jersey, that remittances to the tune of Rs 50 crore were received from these companies in a span of two years, allegedly without any authorization or intimation.

“The foreign exchange received abroad without RBI permission and routed through banking channels to individual family members bank accounts was claimed to have been received as gifts. However, neither credible proof of lawful earnings of the so-called donor abroad nor of the remittance of funds as gifts was produced,” states the adjudication order.

ED officials said while the money transfers from tax havens were allegedly routed to India for “office expenses”, there was documentary evidence to show that these were proceeds from arms sales across the globe. The CBI is already probing some of these transactions and the adjudication order is expected to strengthen the agency’s case.