MLM / Chain Money
Need for public registration of all shell companies

EAS Sarma, the former secretary to GoI suggested that the MCA evolve a system to trace dubious investment or shell companies involved in money laundering

EAS Sarma, former Secretary to the Government of India, has suggested that the ministry of corporate affairs (MCA) evolve a system in consultation with the Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI) to trace and bring to book shell companies involved in money laundering through a web of tax havens.


Mr Sarma, in a letter to Naveed Masood, Secretary, MCA pointed out that “Throughout the world, money-launderers are known to operate through complex webs of shell companies linking the host countries with tax havens in a circuitous way. There are politicians, civil servants, industrial houses and others involved in this. Most of India's black money generated through corruption is routed through such webs via tax havens such as Mauritius.”


The former secretary cited a New York Times report by Ravi Somaiya (dated 9th June) describing how anti-corruption activists have urged President Obama to pursue efforts, backed by the UK and several other countries, to “publicly register owners of shell companies” in order to “thwart corrupt government officials, tax evaders and money launderers who rely on an opaque financial system”.


Mr Sarma said in his letter, that several recent scams in India too, including Satyam, the 2-G spectrum allocation, coalgate, the CWG scam, Indian Premier League (IPL), ongoing investigations into Jagan Reddy’s disproportionate assets, have clear links to tax havens like Mauritius, the Cayman Islands, Isle of Man, Singapore and Lichtenstein. This problem has resurfaced with the various MLM and Ponzi scams that Moneylife has been writing about extensively.


Shell companies have become an oft-used tool to convert illegally held money to neatly laundered, tax paid wealth. Shell companies are created by the party holding money that is not accounted for and then sold to complicit businessmen at a stupendous premium, erasing even the need for benami holding as the transaction is above board and legal. Businessmen who buy shares in these shell companies are rewarded with plum deals and concessions, often related to mines or large tracts of land.


Somaiya’s article quotes Jack A Blum, lawyer and Chairman of Tax Justice Network USA as saying “These anonymous shell companies are used by everybody who steals money”. Somaiya says the issue, backed by PM David Cameron of Britain, was communicated to President Obama through a series of emails from groups of activists earlier this year. It is set to be raised again at the Group of 8 summit meeting of industrialized countries later this month.


Mr Sarma called for the MCA to evolve a system in consultation with SEBI and RBI that will ensure that as soon as a company is registered, links to its ultimate owners are clearly established, so that it becomes easy to trace money trails. “This has assumed a great deal of importance as some of these links point to terrorism, drug and arms trade etc.” he said.


Last month, the former secretary suggested that the MCA constitute a task force consisting of Serious Frauds Investigation Office (SFIO), Enforcement Directorate (ED), State Police and other investigating agencies to identify multi-level marketing (MLM) schemes in their early stages, before any significant damage can be caused.


In the letter, Mr Sarma had said “The moment any company is found to be either registered or unregistered, offering unduly high incentives, it should trigger action on the part of the task force. As an immediate measure, the examples I have given, especially, MMM India and Q Group of companies, should be investigated speedily,”


The MCA has finally decided to hand over the probe of chit-funds, MLM, Ponzi and pyramid schemes to a special task force under the Serious Fraud Investigations Office (SFIO).


Moneylife Foundation Insurance at 50+ Seminar: “Buy term plan and then look at mediclaim”

Buying term life insurance at 50 can also be challenging with possible loading after the...

Premium Content
Monthly Digital Access


Already A Subscriber?
Yearly Digital+Print Access


Moneylife Magazine Subscriber or MSSN member?

Yearly Subscriber Login

Enter the mail id that you want to use & click on Go. We will send you a link to your email for verficiation
TRAI lowers roaming charges for calls, SMSs

“With increased subscribers and usage, the costs associated with national roaming have declined, but not vanished. There are still real costs incurred in providing the national roaming facility,” TRAI said

The Telecom Regulatory Authority of India (TRAI) on Monday announced reduction in the national mobile phone roaming charges, but said there will be no free national roaming as of now.


The sectoral regulator has also come out with conditional free national roaming plans, a move that will bring down cellphone roaming charges.


The changes will come into effect from next month.


“TRAI has reduced ceilings for national roaming calls and SMS and instituted a new regime for providing flexibility to telecom service providers to customise tariffs for national roamers through STVs (Special Tariff Vouchers) and Combo Vouchers,” the regulator said in a statement.


It has also mandated two types of free national roaming plans to be provided by all telecom service providers. These changes will come into effect from 1 July 2013, it added.


“With increased subscribers and usage, the costs associated with national roaming have declined, but not vanished. There are still real costs incurred in providing the national roaming facility.


“Mandating a fully free roaming regime is simply not practicable at this juncture. Compelling a transition to a fully free national roaming regime would result in telecom service providers not being able to recover their costs from roamers,” the regulator said.


In turn, telecom service providers would pass these costs on to all consumers (predominantly non-roamers) through higher tariffs, it added.


The ceiling tariffs prescribed by TRAI in 2007 were Rs1.40 per minute for outgoing local calls and Rs2.40 per minute for outgoing STD calls while on national roaming. These ceilings have been reduced to Re1 per minute and Rs1.50 per minute, respectively, it said.


Similarly, the ceiling tariffs for incoming calls while on national roaming have been reduced from Rs1.75 per minute to 75 paise per minute, it added.


Tariffs for outgoing SMS while on national roaming, which were earlier under forbearance, have now been capped: outgoing SMS (local) at Re1 per SMS and outgoing SMS (STD) at Rs1.50 per SMS. Incoming SMS will remain free of charge, TRAI said.


“TRAI feels that the best way forward is to establish a tariff regime in which roamers self-select themselves out and so minimise the impact on the rest of the subscriber community,” it said.


In working towards free roaming, TRAI has also borne in mind the need to keep costs to roamers at a minimum, it added.


TRAI has decided that STVs and Combo Vouchers which were hitherto allowed only for home tariffs can be permitted for roaming tariffs. This will give the service providers the greatest possible flexibility in customising tariffs for their roaming subscribers.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)