Corruption Continues through Shell Companies

Everyone who thinks corruption has reduced in India, think twice. See this report from Karnataka papers. Grandson of Karnataka CM allegedly Taking facilitation Money through shell companies in Kolkata.

Corruption these days works through shell companies. Many officials have shell companies in names of their direct family on their or wives side. They accept investment in these companies buy property from these companies and pay their relative a high salary which basically reaches them.

Till the Govt seriously ends this crap, black money and corruption will continue.

Simple solution classify every company as startup, msme or large corporate after due checks. All else every single one should be struck by ROC.

TWO COMPANIES in which Chief Minister B S Yediyurappa’s grandson Shashidhar Mardi became a director after the BJP came to power in Karnataka in July 2019 received Rs 5 crore from seven Kolkata shell companies between March and July 2020.

The chain of transactions figure in documents filed with the Registrar of Companies (RoC) that were scrutinised by The Sunday Express, and details of bank accounts of the two firms were telecast by a private TV channel that was taken off air by the state government for eight days, but is now on air again.

Last month, Power TV had alleged in a series of reports that the money was part of a quid pro quo for the promise of obtaining government clearance for RCCL, a private firm, to construct a Rs 660-crore government housing project in Bengaluru.
The project, which was awarded to RCCL in April 2019 when the Congress-JD(S) coalition was in power in Karnataka, is awaiting the final work order.

Speaking to The Sunday Express, Mardi termed the money as “working loans for a project” for which “all documentation” has been provided. He denied the allegations levelled by the TV channel, saying they were made with “ill intentions” and a bid to “tarnish the family”. Mardi, 30, is the son of Yediyurappa’s daughter Padmavathi V Y.
RCCL director Chandrakant Ramalingam did not respond to requests for comment. However, he filed a police complaint last month against Power TV for airing purported sting recordings of conversations suggesting corruption in the clearances for the housing project by the Bangalore Development Authority (BDA). The channel had also alleged that Yediyurappa’s son B Y Vijayendra, 45, and a state government official had demanded Rs 17 crore from RCCL.
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Following the complaint, police raided Power TV’s premises in the city on September 28 and the channel was off air till October 7.
The RoC documents scrutinised by The Sunday Express show that Rs 5 crore was transferred through seven Kolkata companies to Belgravia Enterprises Pvt Ltd and VSS Estates Pvt Ltd, where Mardi is a director. The Kolkata companies share common addresses as per filings with the RoC but The Sunday Express visited the locations to find that none of them were operating from there. The rent agreements submitted by VSS Estates and Belgravia bear the same Bengaluru address as on June 15, 2020.
According to bank statements of Belgravia’s Axis Bank account, the firm received Rs 5.35 crore between March 2020 and June 2020 from the seven Kolkata companies. This money, records show, was subsequently transferred to the Axis Bank account of VSS Estates. A part of these transfers are evident in RoC filings:
# First, Rs 1.95 crore was transferred from Remac Distributors Pvt Ltd, Sakambari Merchants Pvt Ltd and Strategic Vincom Private Ltd through NEFT and RTGS between March 13, 2020 and March 20, 2020 to Belgravia. Subsequently, Rs 1.5 crore was transferred from Belgravia to VSS Estates’ Axis Bank account.
# Then, Rs 3.40 crore was transferred from Sakambari Merchants and four other companies, Jagdamba Commosales Pvt Ltd, Gannayak Commodities, Navtech Creation Pvt Ltd and Ragharana Sales Pvt Ltd, to Belgravia’s Axis Bank account between May 14, 2020, and June 26, 2020. Subsequently, a second tranche of Rs 3.41 crore was transferred from Belgravia to VSS Estates on July 6, 2020.
Three of the Kolkata companies — Remac Distributors, Gannayak Commodities and Rajgharana Sales — are located at 301E, B B Ganguly Street, Room No 4, Kolkata, WB 700012, as per RoC records. The other four — Strategic Vincom, Navtech Creation, Sakambari Merchants and Jagadamba Commosales — are located at 277, B B Ganguly Street, Kolkata, WB 700012.
The first address is located inside a congested market in central Kolkata. “There were some companies that operated from one of the shops a few years ago. But those shops have shut a long time ago,” said Rajeev Shaw, a worker in an optical store.
At the other address, about 100 metres away, there was no sign of the four companies. “I have been here for a very long time and I have never heard the names of these companies,” said Devender Jain, who runs a plywood shop there.
According to the VSS Estates account statement, the Rs 5 crore deposited between March 13 and July 6 by Belgravia was transferred on July 27, 2020, to another account — of a partnership firm VSS Works LLP where Mardi’s partner Sanjay Sree is a director along with a representative of a realty firm P R Ramakrishnan.
VSS Estates Pvt Ltd was started in November 2019 with Mardi and a UK-based partner Sanjay Sree as its directors. It is yet to file details of its 2019-20 revenue with the RoC. An RoC filing by VSS Estates Pvt Ltd includes a copy of its bank statement for the period between May 25-27, 2020, which reflects a balance of Rs 1.59 crore in the account.
The RoC filing of the bank account details for May 2020 for VSS Estates when seen in conjunction with the bank statements released by Power TV for the seven Kolkata companies, Belgravia Enterprises, VSS Estates and VSS Works, shows the movement of the Rs 5 crore from March to July 2020 through the firms linked to Shashidhar Mardi.
Along with Mardi, Sree is also a director in Belgravia, which is a general enterprise firm. Mardi was inducted as a director on August 29, 2019, shortly after Yediyurappa became Chief Minister. In RoC filings upto March 2019, the firm reported zero revenue and losses of Rs 38,458.
Asked about the money, Mardi said: “They are working loans for a project. We have provided all documentation for it. With some ill intentions, allegations are being made. It eventually went to fixed deposits because all the funds cannot be used immediately for a project. We would access it when required. It was to be used in a JV project.”
On the Kolkata companies with common addresses, he said: “These are related to each other. Also, I do not know much about that.”
Asked about the allegations of corruption, Mardi said: “First of all, my partner owns the majority stake in the companies. I hold only 12 per cent. In Belgravia, I do not have any share. My associate is the owner. There is no link between me and a government project. I am a private individual. They have got a loan to work on a project. By claiming to carry out investigative journalism, the TV channel has linked unrelated stuff to defame us.”
He further said: “Belgravia is not related to the family. I was inducted as a director around six months ago but I do not have any shares. It is a 12-13 year old company. They were active till 2013. They did not want to start a new company so they revived Belgravia. It is true that it was inactive for almost five years.”
Responding to a specific question on the money, he said: “It is all genuine loans with TDS paid and paperwork done. All companies have these types of transactions. They are linking the transactions to unrelated things only with the intention to tarnish our family. Am I as an individual prohibited from doing business?”
Officials said the tender for the housing project — to build one- and three-bedroom flats — was floated in October 2017 under the then Congress government. The bid by RCCL was approved in a board meeting of the BDA on December 21, 2017. The project remained in limbo after the Congress government fell in 2018 and a JD(S)-Congress coalition was formed in June 2018.
Ahead of the Lok Sabha polls in 2019, the coalition issued a letter to RCCL on April 22 that year, approving the project and seeking a security deposit of Rs 33.31 crore. After the polls, on June 24, a formal agreement was signed by RCCL and the BDA for the construction of the project. As per the agreement, work was to start from June 24, 2019 and conclude by December 23, 2021.
In July, shortly after the agreement was signed, the coalition government collapsed and the BJP headed by Yediyurappa came to power. The Congress party in Karnataka has alleged that a work order to start the project was delayed by the BJP as favours were sought by those linked to the government.
“The Konadasapura project featured in a big way in a recent session of the state legislature. The responses suggest that the project is still on,” said a senior government official with the BDA. The official refused to comment on the status of the work order to start the project. more