LOCs issued against 56 Chinese nationals in EOW’s shell cos case
Mumbai: The Economic Offences Wing (EOW) of the Mumbai police has received Look Out Circulars (LOCs) issued against 56 Chinese nationals, accused in 39 cheating and forgery cases, including violations of the provisions of the Company Act
Mumbai: The Economic Offences Wing (EOW) of the Mumbai police has received Look Out Circulars (LOCs) issued against 56 Chinese nationals, accused in 39 cheating and forgery cases, including violations of the provisions of the Company Act.
They are accused of violating various legal provisions pertaining to registration of new companies in India and fraudulently becoming directors of Indian companies, some of which turned out to be shell companies, leading to an EOW probe. Officials are considering if the companies were opened with an intention of aiding and abetting commission of any larger financial crimes in the country.
“We have got LOCs issued against the 56 Chinese nationals to prevent their escape from the country,” said Pravin Padwal, joint commissioner of police, EOW.
The FIRs are registered based on the complaints lodged by the Registrar of Companies, Mumbai, in April this year, naming dozens of Chartered Accountants (CAs) and Company Secretaries (CSs) for allegedly helping the accused foreigners first in getting the suspected shell companies registered in the names of Indian citizens and later inducting the foreigners as directors of the companies, and transferring the entities to them for hefty charges. Most of the accused CAs and CSs are from Delhi, EOW officials said.
Citizens from the United Arab Emirates and the United States of America are also named in these cases, apart from 156 Indian nationals. LOCs have also been issued against some of these accused, officials said.
Under the prevailing legal set up, every new company in India is registered with the Ministry of Corporate Affairs through Company Registrar’s office in Manesar, Gurgaon. Under the Companies Act, 2013, other lawful compliances for the company are looked after by the Regional Company Registrar (ROCs) offices in every state. In Maharashtra, the offices are in Mumbai and Pune.
The Mumbai Company Registrar office stated, a few groups including some CAs, are running a full-fledged racket. The accused used the names of their friends and relatives as promoters and initial directors.
They submitted false information and documents to the registrar office -- on physical verifications, they turned out to be fake. Some dummy directors of the companies were relatives of the CAs involved in commissions of the crime, RoC officials have told EOW.
“After ascertaining identity of the suspected Chinese nationals prima facie, and their links with the fraudulently set up companies, we have got LOCs issued against them to prevent their escape from the country. We have started calling CAs and CSs for questioning and recording their statements to find out what was the ultimate intention of Chinese nationals behind setting up companies in India in this way,” said a senior EOW officer.
It is reckoned that the foreign nationals may have indulged in the act for suspected tax evasion and created dummy companies for money laundering. However, nothing substantial has surfaced in the investigation so far.
The ROCs filing fraud cases against the companies having rogue Chinese directors, is part of a nationwide crackdown on shell companies with dummy Indian directors with Chinese connection. Central agencies, such as Intelligence Bureau (IB) officials, are monitoring the progress of the cases.