The SFIO has arrested an alleged mastermind of Chinese shell companies in India

Indian fraud investigators say they have uncovered a web of shell companies with links to China created to conduct illegal transactions. Authorities said they had arrested a man on Sunday who had masterminded the creation of the companies and appointed dummy directors to run the fraudulent businesses. The latest arrest was part of a larger probe launched by the federal government’s Serious Fraud Investigation Office (SFIO) against founders of shell companies used to conduct illegal transactions. Earlier this month the government began cracking down on Indian entities that were providing fake directors to some shell companies linked to China.

The Serious Fraud Investigation Office has arrested an alleged mastermind of Chinese shell companies in India, said the ministry of corporate affairs (MCA) on Sunday. The ministry in a statement said that after the simultaneous search and seizure operations conducted by the MCA on 8 September 2022, on the offices of Jillian Consultants India Private, a wholly owned subsidiary of Jilian Hong Kong at Gurgaon, Finerty at Bangalore and Husys Consulting at Hyderabad.

The ministry said that the SFIO has arrested Dortse and that he is on the board of Jillian India and has clearly emerged as the mastermind of the whole racket of incorporating a large number of shell companies with Chinese links in India and providing dummy directors on their boards. “The arrested person Dortse had shown himself to be a resident of Mandi in Himachal Pradesh as per the records filed with the registrar of companies,” the ministry said.

“Dorte and one Chinese national are the two directors in Jilian Consultants India Private Limited. Based on inputs and the investigations carried out, it was gathered that Dortse had fled from Delhi NCR to a remote place in the state of Bihar and was attempting to escape India through the road route.

“Immediately, a special team was constituted in SFIO which was deputed to the said remote place. In the evening of 10th September 2022, SFIO had arrested Dortse, who was later produced in the jurisdictional court, and orders for his transit remand were obtained,” the statement said.

Also, the evidence procured during the inquiry by ROC Delhi and the simultaneous search operations clearly point to dummy directors being paid by Jilian India to act as dummies in several shell companies.  Boxes filled with company seals and digital signatures of dummy directors have been recovered from the site, as per the ministry. The Indian employees were in touch with their Chinese counterparts through a Chinese instant messaging app Husys was also found to be acting on behalf of Jilian India.

If the central government is to be believed, initial observations reveal that Husys had a pact with Jilian Hong Kong. “Investigations so far have revealed the possible involvement of these shell companies in serious financial crimes detrimental to the financial security of the country,” it said.

The Ministry of Corporate Affairs, under whose aegis Serious Fraud Investigation Office operates, had assigned the investigation of Jilian Consultants India Private Limited and 32 other companies to SFIO on Friday.

Earlier, the Ministry of Corporate Affairs (MCA) on Thursday (September 8) initiated a crackdown on Indian entities that were providing “fake directors” to hundreds of Chinese shell companies in cities like Delhi, Bengaluru, Hyderabad, and Gurugram, sources had said. They added that Indian citizens with no education and working in menial jobs were being provided as Directors to Chinese Shell companies.

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