Another arrest in remittance racket

The Enforcement Directorate has busted another module with the arrest of an alleged middleman involved in illegal overseas remittances to Hong Kong through banks. The syndicate also helped unscrupulous Indian importers clear outstanding dues with Chinese exporters.

The ED probe has revealed that accused Manish Jain used 66 bank accounts with a Ghaziabad branch of Oriental Bank of Commerce to transfer Rs.505 crore abroad between 2006 and 2010. Thereafter, he transferred funds using multiple accounts with ING Vysya Bank, ICICI Bank, Kotak Mahindra Bank, Indusind Bank, Dhanlaxmi Bank, Yes Bank and DCB Bank.

“Investigations have revealed that at least Rs.557 crore has been transferred out to Hong Kong through 11 bogus firms in the garb of imports since 2006. Some of the companies have been identified as Daksh Impex, Pacific Exim (India), Alaska Trading, Aadinath Exim (India), Apple Computers, Sai International and Jai Bharat Impex,” said a senior ED official.

The breakthrough came following disclosures by Sanjay Aggarwal, who was arrested for his alleged role in illegal remittances of Rs.430 crore in connection with the Bank of Baroda case, about his links with one P.R. Forex.

“Searches at the forex office on Wednesday revealed that another group led by one Rajiv Wadhwa was into illegal overseas remittances by the banking channel. The company operated through middleman Manish Jain from 2006 to 2014, after that he had roped in Mr. Aggarwal,” the official said.

The ED arrested Manish Jain on money laundering charges. The accused illegally transferred funds abroad on fake import orders.

In order to claim more duty drawback incentives from the government, unscrupulous exporters overvalue consignments and through conduits, sell them to end buyers at genuine rates. However, on inflated invoices raised by the conduits operating abroad, the exporters receive excess payment.

To make good the deficit on the conduits’ part, the exporters get the extra sum deposited in multiple bank accounts through small transactions. The amount is then routed to current accounts of shell companies, which transfer the funds back to the conduits showing advance remittances for imports that were never done.

A similar modus operandi is adopted by many importers, who in order to evade customs duty undervalue the goods.

The ED official said two Hong Kong-based firms operated by Mr. Jain have been identified as Tanvi Enterprises and Pacific Exim. “He deposited unaccounted cash in Indian banks and transferred the amounts to his companies’ accounts with a Hong Kong branch of HSBC Bank,” he said.