235 sus­pi­cious ac­counts probed for al­leged ‘be­nami’ ac­tiv­ity last month alone

New Straits Times - - Business -

NEW DELHI hoarded by tax evaders.

It fol­lowed a shock de­ci­sion by Prime Min­is­ter Naren­dra Modi to with­draw high-value bank notes from cir­cu­la­tion, com­pelling mil­lions to join the for­mal bank­ing sec­tor for the first time. Pre­vi­ously, around 90 per cent of ev­ery­day trans­ac­tions in In­dia were in cash.

Hold­ing real es­tate in some­one else’s name has been a par­tic­u­larly pop­u­lar av­enue for those seeking to le­git­imise black money and dodge their tax dues.

Those caught out could have their wealth seized, face a sev­enyear jail term and pay hefty fines equiv­a­lent to 25 per cent of the as­set’s value.

Gov­ern­ment of­fi­cials say 235 sus­pi­cious ac­counts were un­der in­ves­ti­ga­tion for al­leged be­nami ac­tiv­ity last month, with more than half frozen and prop­er­ties seized.

But Modi, who was elected in 2014 on a pledge to wipe out cor­rup­tion and kick­start the econ­omy, has promised more scalps as the drag­net widens.

“It has some very tough pro­vi­sions. Those hold­ing such prop­erty (RM359.64 bil­lion) last year.

The out­come of the trial may tip the scale in the sib­ling ri­valry at the sprawl­ing con­glom­er­ate with busi­nesses in ho­tels, theme parks, duty-free shops, chem­i­cals and as­sets in­clud­ing Guylian Bel­gian choco­lates and New York’s Palace Ho­tel.

While chair­man Dong-bin, 62, had ral­lied ex­ec­u­tives against brother Dong-joo, 63, to con­sol­i­date con­trol of the flag­ship com­pany should start con­sult­ing their (ac­coun­tants),” he said.

In one case, the depart­ment said 33 mil­lion ru­pees (RM2.22 mil­lion) were hid­den in the name of a woman who wasn’t even aware the ac­count ex­isted.

In an­other in­stance, US$9 mil­lion (RM40 mil­lion) was spread across 20 fic­ti­tious ac­counts.

“Even within fam­i­lies, peo­ple want to hide their as­sets from oth­ers so will pur­chase it in some­one else’s name,” said Ab­hishek Goenka from tax and au­dit firm PwC In­dia. AFP based in Ja­pan, the older brother told Bloomberg News late last year that he was con­fi­dent he would win con­trol of the group and clear his name in court.

In to­day’s trial, Kyuk-ho and Young-ja face charges of tax eva­sion, em­bez­zle­ment and breach of fidu­ciary duty, while Dong-bin is un­der in­dict­ment for em­bez­zle­ment and fidu­ciary breach. Dong-joo faces one count of em­bez­zle­ment. Bloomberg


Real es­tate lawyer Naresh Gupta says new rules in­tro­duced by the In­dian gov­ern­ment to crack down on the prac­tice of hid­ing for­tunes in the names of lowly-paid staff to avoid pay­ing taxes as ‘very dra­co­nian’.


Broth­ers Shin Dong-bin (left) and Shin Dong-Joo are em­broiled in a ri­valry for con­trol of Lotte Group.

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