A new report by US-based investigative firm Viceroy Research LLC has brought to light serious allegations against Vedanta Resources Ltd (VRL) and its listed Indian subsidiary Vedanta Ltd (VEDL), involving secret regulatory investigations, undisclosed financial rebates and potential breaches of India’s foreign exchange laws. The report centres on a previously unreported inquiry by the directorate of enforcement (ED) from July 2023 into questionable cross-border remittances categorised as brand fees which, allegedly, functioned as informal, interest-free loans from VEDL to its financially stretched parent company.
According to the report (
https://viceroyresearch.org/2025/07/30/vedanta-the-secret-enforcement-directorate-meeting/), VEDL’s chief executive officer (CEO) and chief financial officer (CFO) were summoned by ED over brand fee payments that had raised red flags due to their irregular nature and timing. "These fees, purportedly meant to be paid at the beginning of the financial year, were instead sent to VRL on an ad hoc basis—often when the parent company faced liquidity shortfalls. The remittances were flagged as potentially non-compliant with the Foreign Exchange Management Act (FEMA) and corporate governance norms. While the company’s CEO Sunil Duggal did not attend the ED meeting, newly appointed CFO Sonal Shrivastava did, alongside executive Ajay Agarwal. Shrivastava resigned from her post just five months later, shortly after attending the ED interview and VEDL’s annual general meeting (AMG)," Viceroy says.
To avoid immediate enforcement action, Viceroy claims that VRL quietly agreed to rebate Rs1,030 crore (around US$123mn- million) to VEDL. This significant repayment, however, was never disclosed to shareholders, bond-holders, or market regulators. Since then, Viceroy says, brand fee 'refunds' have become a routine year-end adjustment, indicating a tacit acknowledgement of non-compliance. These refunds have not been transparently reported in financial statements and remain unknown to many stakeholders, including creditors.
The report alleges that these brand fee payments were made without adequate contractual backing and served as a core funding channel for VRL’s offshore obligations. Viceroy states that in FY24-25 alone, VEDL and its subsidiaries remitted over Rs3,085 crore (more than US$361mn) in brand fees to VRL—an amount equal to 15% of VEDL’s net income. These transfers helped service VRL’s US$4.9bn (billion) net debt and annual interest outgo of over US$835mn. The report describes the arrangement as a circular, unsecured financing structure lacking economic substance, commercial justification, or transparency.
Viceroy also raises concerns about the role of ICICI Bank which serves as the authorised dealer bank responsible for processing VEDL’s cross-border payments. It alleges that ICICI Bank approved these large outward remittances without reviewing the underlying contracts or assessing the economic rationale, thus bypassing due diligence standards mandated by the Reserve Bank of India (RBI) under FEMA. Whistle-blower accounts cited in the report claim that ICICI Bank has never flagged these transactions for further scrutiny.
Despite ED’s intervention and the Rs1,030 crore refund, Viceroy says there has been no formal closure of the case. The investigation remains open, with no legal immunity or regulatory clearance granted. The report warns that the absence of public updates should not be construed as a resolution and that future enforcement action remains a real possibility. It draws parallels to ED’s recent high-profile case involving Xiaomi India, where remittances routed as royalties without proper agreements resulted in the seizure of Rs5,551 crore by authorities, an action upheld by the Karnataka High Court.
One of the more serious implications of the report is the alleged non-disclosure of the ED probe and subsequent refund to bond-holders, especially those involved in Vedanta’s debt restructuring exercises. Viceroy claims that, while creditors were led to believe that brand fees were not at risk and VEDL’s steel assets could be sold to repay debt, the sale had already been shelved internally. Moreover, the report states that any attempt to sell those assets would likely have failed due to unresolved legal, environmental and financial issues.
The report also questions the internal governance processes at Vedanta. It claims that efforts were made to secure board-level approvals for new brand fee contracts with VEDL and Hindustan Zinc Ltd (HZL), but that directors were allegedly pressured into signing agreements without proper review. In some cases, formal board resolutions could not be obtained, leading to informal letters of assent allegedly signed under duress, it says.
Despite the scale of the remittances and the regulatory scrutiny involved, Viceroy asserts that neither VEDL nor VRL informed their auditors or the broader market about the investigation or the refunds. The continued lack of transparency, it argues, exposes minority shareholders, institutional investors and Indian regulators to potential risk, especially as the brand fee model remains unchanged and continues to function as a key liquidity tool for VRL.
At the time of publication, Vedanta Ltd and Vedanta Resources have not publicly responded to the allegations outlined in the Viceroy Research report. The revelations are likely to prompt renewed calls for transparency from investors, greater scrutiny from Indian regulators and possible questions around ICICI Bank’s role in enabling remittances under disputed classifications.
While the full consequences of these allegations are yet to play out, the report underscores the financial fragility of the Vedanta group’s intercompany arrangements and the critical need for enhanced disclosure and regulatory oversight in related-party transactions involving publicly listed companies.
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