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Strong cases against accused CAs: Inquiry on helping Chinese shell firms
About 400 professionals , CAs and Company Secretaries (CSs) , are under scanner of various regulatory agencies for their professional misconduct and unlawful activities detected earlier this year.
The Institute of Chartered Accountants of India, after a preliminary investigation, has found strong cases against many of the about 200 chartered accountants (CAs) accused of helping illegal Chinese shell companies, ICAI president Debashis Mitra said, adding that strict action would be taken against the guilty by the end of this year after a thorough enquiry by the disciplinary committee.
About 400 professionals , CAs and Company Secretaries (CSs) , are under scanner of various regulatory agencies for their professional misconduct and unlawful activities detected earlier this year. HT reported on April 20 that the ministry of corporate affairs (MCA) in February directed the Registrar of Companies (ROC) to file complaints against hundreds of CAs and CSs before their respective professional institutes -- the Institute of Chartered Accountants of India (ICAI) and the Institute of Company Secretaries of India (ICSI).
Mitra said ICAI is empowered to take strict action against such CAs who act unlawfully and whose actions are against the interest of the nation. As a maximum penalty, they could be barred for life, he said on Tuesday. ICAI is a statutory body that regulates the profession of chartered accountancy in India.
According to a professional, who did not wish to be named, ICSI is also conducting investigations on this matter concerning involvements of its members.
As soon as ICAI received the list of professionals associated with formation of these Chinese companies, it sent notices to them, and after preliminary enquiries ,sent the matter to the disciplinary committee in cases where there was some substance to the complaint, Mitra said. He, however, declined to disclose the exact number of CAs that have been found prima facie guilty.
According to two government officials, the Enforcement Directorate (ED), the Central Bureau of Investigation and tax authorities are also probing several dubious transactions of unscrupulous Chinese entities. The investigations have been intensified after the arrest of Gurugram-based Chinese firm, Jilian Consultants India Pvt Ltd’s director Luo Dortse, who is an alleged mastermind in forming of shell companies.
HT on September 12 reported that besides Jilian Consultants, almost three dozen Chinese entities are under the scanner of investigative agencies after the government’s crackdown against shell companies and online loan sharks having links in China. According to another report in HT on September 4, offices of online payment gateways -- Paytm, Razorpay and Cashfree – were raided by the Enforcement Directorate in connection with its probe into illegal instant smartphone-based loans by Chinese entities.
According to the September 4 report in HT, several Chinese nationals-backed companies were incorporated around the Covid-19 outbreak in 2020 with the help of chartered accountants and they were involved in dubious and illegal activities. According to one of the officials cited above, agencies have been probing such entities for some time.
The modus operandi of these entities is to use services of unscrupulous CAs, company secretaries and other professionals in getting on board nondescript people as dummy directors in the board of shell firms.
