AFTER spending one year in jail, the term punctuated by hospital visits, Nationalist Congress Party (NCP) leader Chhagan Bhujbal continues to have his luck slide downhill. The 69-year-old leader, who was once the Deputy Chief Minister of Maharashtra, was arrested by the Enforcement Directorate (E.D.) on March 14, 2016, under the Prevention of Money Laundering Act (PMLA) on the charge that he and his associates, including his son Pankaj and nephew Sameer Bhujbal, had channelled illegal money through Bhujbal’s vast empire that largely consisted of real estate investments amounting to around Rs.2,500 crore.
The investigation had been fuelled by the evidence that the Aam Admi Party (AAP) dug out against Bhujbal. The AAP alleged that as Public Works Minister Bhujbal had received kickbacks on many occasions for award of contracts. The party presented the evidence to state agencies and later, when nothing was done about it, filed a public interest petition in the Bombay High Court. The court appointed a special investigation team of officials from the Anti-Corruption Bureau and the E.D.
At that time, Bhujbal was being investigated for alleged corruption in awarding contracts for the construction of the Maharashtra Sadan in New Delhi. The investigation had been initiated on the basis of a complaint filed by Bharatiya Janata Party MP Kirit Somaiya. Bhujbal was also fighting other cases, including one by the co-founder trustee of Bhujbal’s Maharashtra Education Trust.
Sources in the investigating agencies believed that the money that Bhujbal allegedly received was sent abroad through hawala operators and brought back to India through shell companies located across the country. Since 2016 the E.D. has been tracking some of the Kolkata-based companies that had shares in these concerns.
The E.D.’s money-laundering investigations, named Operation Shell Companies, culminated in a huge nationwide raid on April 1, involving 110 locations across 16 States. It yielded a wealth of information, including specific information against Bhujbal and that relating to a scam in the National Rural Health Mission in Uttar Pradesh.
One of the raided locations in Mumbai belonged to Jagdish Prasad Purohit, who claimed to be a financial adviser. He apparently told the investigators that he had created about 700 shell companies headed by 20 dummy directors. Of these, at least 130 are believed to be still operational, while the rest had been disbanded after their purpose was served. In a statement, the E.D. said Purohit had “provided accommodation entry to the tune of Rs. 46.7 crore to Chhagan Bhujbal”.
According to investopedia.com, accommodation entry is “a type of trading in which a trader accommodates another by entering into a non-competitive purchase or sale order. An accommodation trade is often executed when two traders are participating in illegal trading.” Taxguru.in further explains: “The method of providing accommodation entry entails breaking up large amounts of money into smaller, less-suspicious amounts. In India, this smaller amount has to be below Rs.50,000 as deposit of cash below this amount does not require providing PAN of the depositors. The money is then deposited into one or more bank accounts either by multiple people or by a single person over an extended period of time. Also, even larger amounts are deposited in the banks with PAN numbers of individuals who are mostly illiterate and work for these entry operators for a small salary or commission. The money is then routed through paper companies controlled by these operators.” Taxguru.in also says, “Kolkata is undoubtedly the Mecca of such operations liberally providing entries to business concerns all over the country….” Purohit is alleged to have converted the Rs.46.7 crore via two shell firms, Kumaon Engineering Co. Ltd. and Sea Green Realtors Pvt. Ltd. Purohit is the director of both companies.
The E.D. has submitted draft charges to the court, in which Bhujbal and his associates have been charged with laundering Rs. 4,264.25 crore since 2006.
Lyla Bavadam
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