A power company based in the Isle of Man is being investigated by the Indian authorities over alleged potential money laundering and other illicit flows of funds.

OPG Group’s offices in Chennai, Tamil Nadu, have been raided by India’s Directorate of Enforcement (ED) as part of an investigation into alleged violations of the foreign exchange and foreign direct investment regulations.

Some £790,000 in Indian currency was seized from its offices and homes of its directors.

ED says it is investigating the involvement of shell companies, fake invoicing, involvement of overseas entities, diversion of funds and potential violations of anti-money laundering laws.

OPG Group, listed on the London Stock Exchange’s AIM market since 2008, develops and operates power plants in India where it employs thousands of workers.

Its parent company OPG Power Ventures is based in Athol Street, Douglas. The OPG Group reported revenue of £155.7m and an operating profit of £11.2m in 2023-24.

In a statement the company confirmed it is the subject of an investigation into alleged regulatory non-compliance by the group under the Foreign Exchange Management Act (FEMA).

It said: ‘The group considers that it has undertaken all material transactions, following professional advice on compliance with FEMA and is confident that it has been compliant. The group will offer full co-operation to the investigation.’

OPG said its plants will continue to operate as usual and it did not expect the investigation to have any material impact.

‘The group considers it has a robust track record of corporate governance and compliance and has full faith and confidence in the regulatory system of India,’ it added.

FEMA regulates foreign exchange transactions, including foreign direct investment into India and overseas investment by Indian companies.

OPG Group had received foreign direct investments from Seychelles-based companies set up by family members for use in the power sector.

However, ED alleges funds were misused, and multiple violations of FEMA provisions have come to light.

It said a significant portion of the funds was illegally routed into the stock market, including investments in mutual funds and was also invested in land and real estate, which is strictly prohibited under foreign direct investment guidelines.

A substantial amount was converted into cash with the assistance of vendor companies, claims ED.

During the course of its search, ED also recovered handwritten notes that related to the generation and use of the cash.

Further scrutiny revealed that the management of the OPG Group had set up several overseas joint ventures and companies in Dubai, Isle of Man, Seychelles, Singapore, and Hong Kong, through which a significant portion of the diverted funds was allegedly ‘parked’ abroad.

‘These foreign entities are under investigation to determine the full extent of the financial flows and whether these funds were used for money laundering or other illicit activities,’ ED said.