In a major crack down, the Enforcement Directorate on Saturday conducted searches against 300 shell companies across 16 States on suspicion of large-scale money laundering and foreign exchange violations. Premises of some professionals, the “brains” behind the operation of such companies, were also searched.
The searches were conducted at 110 locations in Delhi, Mumbai, Chennai, Kolkata, Hyderabad among other places.
Some of the companies searched were allegedly involved in major money-laundering cases related to former Maharashtra Deputy Chief Minister Chhagan Bhujbal, Andhra Pradesh opposition leader Y.S. Jagan Mohan Reddy and Uttar Pradesh-based official Yadav Singh.,
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“In Chennai we are searching and investigating eight shell companies. Preliminary investigations shows that over ₹80 crore has been transferred to South East Asia from these shell companies,” a senior official at ED told
Galaxy Impex, Snowcity& Co, B K Electro Tools products, Green International, Metal Tradus and Horizon Trading are the six firms searched, said the official. The names of other companies were not known immediately.
)“A Mumbai-based operator, Jagdish Prasad Purohit, admitted to have formed around 700 shell companies using 20 dummy directors. Of these, 130 are still in existence. He had allegedly provided accommodation entry of ₹46.7 crore to Mr. Bhujbal,” said a senior ED official.
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Among the shell firms were those linked to the cases against Mumbai-based Rajeshwar Experts, whose owner allegedly laundered ₹1,478 crore using over 500 accounts, on the pretext of exporting diamond and gold. Some entities were searched in connection the AGS Infotech case, said the Directorate.
“Several companies were also involved in the laundering of huge sums of cash after the demonetisation was announced,” said the official.
Certain shell firms were found to have remitted huge amounts to other countries for imports that never materialised. They had either produced forged bills of entry or had simply skipped the procedure. “A sum of ₹20 crore was found in the bank account of one such entity, which may be attached,” said the official.
50 firms at one address
In a Kolkata-based case, over 50 companies were registered at the same address, which, on verification, was found to be of a vacant residential premises which had been rented out. The tenant had vanished, following which the landlord received loan recovery letters against two of the companies that are currently under ED probe for misuse of bank accounts.
“Premises of a Chartered Accountant on Barakhamba Road in Delhi’s Connaught Place were also searched. He had formed over 200 shell companies and had given accommodation entries to a large number of people, including [members of] sand mafias, from Uttar Pradesh,” the official said.
In another case, a shell firm was found to have exported carpets to its sister concern incorporated abroad. The export proceeds were never realised and the person behind these companies had applied to the Reserve Bank of India to write off the outstanding export proceeds.
From another Mumbai premises, the ED sleuths seized a fake identity card of Special Agent, Interpol’s Anti-Terrorism Division, in the name of one Chetan Shah, stored in a computer.
The ED crackdown comes weeks after the Central government announced the setting up of a task force, at the instance of Prime Minister Narendra Modi, for stringent action against shell companies.
Of the 15 lakh registered companies, only six lakh file their annual returns. The agencies suspect that a large number of these companies provide accommodation entries by raising fake inflated invoices to help the others evade tax. They are also used to show share purchases at a premium for converting black money into white.
The government plans to invoke the Benami Transactions (Prohibition) Amendment Act for harsh action against those involved.
(with inputs from Sangeetha Kandavel and Sanjay Vijayakumar)