Serious Fraud Investigation Office (SFIO) has arrested Dortse, a Board member of Jillian Ltd, who has emerged as the mastermind of the racket of incorporating a large number of shell companies with Chinese links in India and providing dummy directors on their Boards.
Dortse was arrested on Saturday evening at a remote place in Bihar —he had fled from NCR Delhi and was looking to get out of India through the land route. He was later produced in the Jurisdictional Court and Orders for his transit remand were obtained.
The arrest follows simultaneous search and seizure operations conducted by the Corporate Affairs Ministry (MCA) on the offices of Jillian Consultants India Private Ltd, a wholly owned subsidiary of Jilian Hong Kong Ltd., at Gurgaon, Fininty Pvt Ltd at Bangalore and Husys Consulting Ltd, an erstwhile listed company at Hyderabad.
MCA, under whose aegis SFIO operates, had assigned the investigation of Jilian Consultants India Private Limited and 32 other companies to SFIO on September 9, 2022. Dortse and one Chinese national are the two directors in Jilian Consultants India Private Limited.
Dortse had shown himself to be a resident of Mandi in Himachal Pradesh as per the records filed with the Registrar of Companies.
Serious financial crimes
Evidence procured during the enquiry by ROC Delhi and the simultaneous search operations clearly points to dummy directors being paid by Jilian India Ltd. 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, an official release said.
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 the two companies had a pact.
Investigations so far have revealed the possible involvement of these shell companies in serious financial crimes detrimental to the financial security of the country, according to MCA.
MCA had earlier this year prepared a list of 400 professionals —chartered accountants, company secretaries and cost accountants—and asked the professional institutes overseeing them to initiate disciplinary action against them for their alleged role in aiding several Chinese firms violate the Companies Act 2013, through their India-incorporated subsidiaries and shell companies in recent years.
The Centre, in recent years, has been tightening its foreign direct investment (FDI) regime on investments coming from countries that share a land border with India. The apparent effort was to curb Chinese investments in Indian companies.
While the Foreign Direct Policy was tweaked in April 2020, making it mandatory to seek the Centre’s nod for investments coming from such neighbouring countries, the MCA had, in June this year, stipulated that citizens of those countries should obtain the Home Ministry’s clearance if they were to be appointed directors of Indian companies.
The MCA had also recently made rule changes, requiring the furnishing of the Foreign Exchange Management Act (FEMA) compliance declaration at the time of incorporation of companies involving investments from land-border-sharing countries.