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ED tightens noose around shell firms; raids conducted at 110 locations in 16 states

Raids conducted on 300 companies at 110 locations in 16 states

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An Enforcement Directorate team raids Jagdish Prasad Purohit’s house in La Serena Building on JP Road Andheri, Mumbai, on Saturday
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The Enforcement Directorate (ED) through Saturday conducted searches at 110 locations in 16 states as a part of its crackdown on entry operators (individuals involved in money laundering) and shell companies that have allegedly facilitated black money transactions and laundering of demonetized currency. 

The nationwide raids started hours after the expiry of the deadline for black money disclosure under the Pradhan Mantri Garib Kalyan Yojna (PGMKY).
 
Starting Saturday morning, ED teams visited raided the premises of about 300 shell firms across cities, including Delhi, Chennai, Kolkata, Chandigarh, Patna, Ranchi, Ahmedabad, Bhubaneswar and Bengaluru, among others.
 
The raids covered shell companies associated with a diverse cast of characters: from a former chief engineer of Noida Authority Yadav Singh, to companies such as AGS Infotech, and Rajeshwar Exports, Andhra Pradesh politician YS Jagan Mohan Reddy, and politically-connected individuals such as Mayawati's brother Anand, and a Mumbai-based associate of Maharashtra strongman Chhagan Bhujbal.
 
ED officials told DNA that action is being taken under the provisions of the Prevention of Money Laundering Act (PMLA) as well as the Foreign Exchange Management Act (FEMA) to check instances of money laundering and illegal foreign exchange transactions.
 
The action is part of the mandate given to the ED under a Special Task Force (STF) that was recently created on the directions of the Prime Minister's Office (PMO). A task force chaired jointly by the Revenue Secretary and Corporate Affairs Secretary was mandated to coordinate action against these dubious companies.
 
Certain shell companies have been found to have remitted huge amounts to other countries for imports despite no such imports being brought in, causing a loss of foreign exchange. These companies had either produced a forged bill of entry or not submitted any bill of entry at all.
 
In Delhi and satellite cities such as Noida and Gurugram, searches were carried out at 16 locations where shell companies operated by former UP chief engineer Yadav Singh of Noida, accused of corruption, were housed. CBI has registered a case against Singh, during whose investigation the names of Samajwadi and Bahujan Samaj Party leaders have cropped up. 
 
At one location on Barakhamba Road, Delhi, the ED searched the office premises of a chartered accountant, where they found he had formed more than 200 shell companies and had accommodating facilities to a number of persons in Uttar Pradesh. He is also suspected of being involved in laundering black money for some of UP’s sand mafias.
 
In Kolkata, more than 50 companies were found to have identical registered addresses. On checking, these were found to be vacant residential premises. The landlord has claimed that he had rented the premises to a private individual around three years back but that the said person had disappeared within three months. The landlord said he has been receiving loan recovery letters against two companies registered at the said premises.
 
The two companies are reportedly already under investigations by the ED under a PMLA case involving misuse of bank accounts.
 
In Chennai, the Department raided at least 13 locations linked to eight companies.
The entry operator connected to Rajeshwar Exports has also been searched. The said company had made remittances to the tune of Rs 1,476 crores for import of diamonds, which were allegedly grossly overvalued.
 
In another case, a shell company was found to have exported carpets to its sister concern incorporated outside India. The export proceeds were never realised, and the person behind the companies had applied to RBI for a write-off of outstanding export proceeds.

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