As ED seized a huge amount of cash from the residence of former Bengal Minister Partha Chatterjee’s aide Arpita Mukherjee, the probe agency has identified the role of more than 14 shell companies in the money laundering case.
The ED probe revealed that shell companies were operating with the address of Arpita Mukherjee’s Belghoria flat.
The shell companies or ‘Jamakarchi’ companies have been used for a long to convert huge amounts of black money to white across the country.
Such companies or corporations exist only on paper and have no office and no employees. However, they may have a bank account or may hold passive investments or be the registered owner of assets like intellectual property or ships.
“Kolkata market once used to be the capital of shell companies. The companies are the best legal way to route money, it’s a way of money laundering, people earned crores through this,” Sources in the market said.
Such companies have been used as a mechanism for various financial manoeuvres or kept idle for the future. Since the 1980s, shell companies have existed in Kolkata and have flourished since then.
Black Money worth crores of rupees are turned into white via these shell companies, a Kolkata resident, who claims to be an agent of a shell company based in Mumbai, said on the condition of anonymity.
“About 20 lakh shell companies used to exist around 2011. However, then with strict regulation of IT rules and other regulations, the number has reduced. As of now, there are about 5 lakh shell companies in Kolkata,” he told News18.
“If a person has Rs 5 crore and wants to make it white, he calls me and tells me the requirement. There are shell companies registered following all the norms. The company takes in the money and shows it as an investment or a loan. The money is now white and for this, I get 2 per cent,” he further said.
According to the agent, such companies exist in three tiers and the Income Tax (IT) Department only checks up to the third tier.
“Suppose A, B and C company is existing. So, the IT department asks Company A about the money, A says it has got it from Company B, IT then goes to Company B asks them about the origin of the money and it says it has received it from Company C. Now, the IT department does not check more than three tier,” he added.
On the question of why Kolkata is a hub of shell companies, the agent said, “The commission in Kolkata for depositing such shell companies is 2 percent, in Bangalore it’s 10 percent and in Delhi it’s 8 percent. This is the reason behind its progress in Kolkata.”
He, however, added that post-2012, the number of shell companies have dipped. In the case of Arpita Mukherjee too, money worth crores were turned into white through this system.
Another businessman said that the shell companies are dying due to regulation, but went on to say that money in crores are still transacted through this system.
The problem for the government agencies to track such companies is that there is no definite system to prove the crime until Income Tax Department or the Enforcement Directorate comes into the picture.
“Offence committed by shell companies is primarily tax evasion and money laundering. Any case of money laundering or tax evasion is primarily cheating/frauds. This is very minimal and not serious enough to attract serious punishment and we don’t have all the information like IT Dept regarding transactions,” a senior police officer told News18.
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