The Serious Fraud Investigation Office (SFIO) late Saturday arrested a person said to be the mastermind behind a slew of Chinese shell companies operating in the country, from a remote part of Bihar while he was attempting to cross the border through the land route.
The Ministry of Corporate Affairs had conducted a simultaneous search and seizure operation on September 8 at the Gurugram and Bengaluru offices of a firm called Jillian Consultants India Private Limited, a wholly-owned subsidiary of Jilian Hong Kong Limited. A Hyderabad-based firm Husys Consulting Ltd, that was earlier listed on the stock exchanges, was also probed in the operation.
“Investigations so far have revealed the possible involvement of these shell companies in serious financial crimes detrimental to the financial security of the country,” the ministry said.
The person arrested on Saturday, after the ministry assigned SFIO the task of investigating Jillian Consultants and 32 other shell companies with Chinese links in India, has been identified as a board member of the firm, Mr. Dortse, who has ‘shown himself’ as a resident of Mandi in Himachal Pradesh.
“Mr Dortse is on the Board of Jillian India Ltd and has clearly emerged as the mastermind of the whole racket of incorporating large number of shell companies with Chinese links in India and providing dummy directors on their Boards,” the ministry said in a statement.
Evidence acquired during the search operations points to dummy directors being paid by Jilian India Ltd. to act as dummies in several shell companies, with boxes full of company seals and digital signatures of dummy directors being recovered.
“The Indian employees were in touch with the Chinese counterparts through a Chinese instant messaging app. Husys Ltd. was also found to be acting on behalf of Jilian India Ltd. Initial observations reveal that Husys Ltd. had a pact with Jilian Hong Kong Ltd,” the ministry said.
This operation could also be linked to the crackdown on illegal loan apps directed by Finance and Corporate Affairs Minister Nirmala Sitharaman earlier this week, under which the Corporate Affairs Ministry has been tasked with identifying and de-registering shell companies to prevent their misuse.
The Reserve Bank of India is also reviewing dormant non-banking finance companies (NBFCs) and has been asked to cancel their licences to avoid their misuse by such app operators. Ms. Sitharaman had asked all ministries and agencies to take all possible actions to prevent operations of illegal loan apps that especially target vulnerable, low-income groups at exorbitantly high interest rates and then resort to blackmail and criminal intimidation to recover such loans.
“Mr. Dortse and one Chinese national are the two directors in Jilian Consultants India Private Limited,” the corporate affairs ministry statement said. Mr. 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 and a special SFIO team was dispatched there.
“In the evening of September 10, the SFIO had arrested Mr. Dortse, who was later produced in the jurisdictional court and orders for his transit remand were obtained,” the statement concluded.
