Black Money + Shell Companies = Bank Chor Nitin Sandesara


Black Money + Shell Companies = Bank Chor Nitin Sandesara

Illustration: Arati Gujar

Another day, another businessman has fled the country after owing a consortium of banks thousands of crores. The sequel to Bank Chor should feature the trio of Nirav Modi, Mehul Choksi, and Nitin Sandesara because unlike Riteish Deshmukh, they did actually end up making a lot of money.

Sandesara, the absconding director of Sterling Biotech, reportedly opened over 300 shell companies to launder over ₹5,000 crore. His fellow Hall of Famers Nirav Modi and Mehul Choksi also set up over 20 such shadow companies to skirt taxes and launder money. Shell companies are to money launderers what #wanderlust is to travel bloggers and Undertaker is to WWE – indispensable.

But what exactly is money laundering and what the hell is a shell company? Do you put your money in a washing machine and something magical happens? Not too far away from the truth, actually. Money laundering is the process of converting dirty money into squeaky clean money and shell companies are the washing machines that aid the process. So how does this machine work? Let us understand money laundering and shell companies with a very desi example that fills up our WhatsApp every day – fake news.

What if you had to convince people that fake news is real? How would you go about doing it? How do you convince millions of people that the ₹2,000 note actually has a GPS microchip that can track your location? It is simple, you create a fake website that looks very much like a real news website, you create a fake author profile that looks like a real author, and you write a made-up article that reads like a proper news article.  

Money laundering is the process of converting dirty money into squeaky clean money and shell companies are the washing machines that aid the process.

Once you have the website up and running, it is time to make it seem legitimate, mainstream, and popular. To do that, you create fake Facebook and Twitter profiles. The names and handles are made up, the “works at student” section is bullshit, and the display pictures are all fake. Through all of these fake profiles, you share the links to your article and talk about what a great piece of investigative journalism it is. As hundreds and hundreds of such profiles start sharing this as legitimate news on all mediums, enough people start believing it as real news, and suddenly Sudhir Chaudhary is doing a segment on it on Zee News.

How do you ensure that you don’t get caught? You create a web of lies so intricate that the detection of the source and actual person behind it becomes virtually impossible. Instead of creating one fake website, you create hundreds of fake websites, and link all of them. The source of the news on the first website is the second website, on the second website it is the third website and so on. You get lost trying to identify where the fact first originated from. You use fake gmail ids to create the Facebook and Twitter profiles so no one can ever find out who the real fans of your website are. You host your website and buy a domain in a country like Sweden or Switzerland where privacy laws help protect your anonymity so investigative agencies never show up at your door.

Money laundering is the process of convincing people that fake news is real news and fake websites and profiles are the shell companies that facilitate this process. Mind you, shell companies can be legal as well, but are mostly associated with shady and illegal activities.

Most small-time launderers are the chindi chors in the world of big scamsters. But the impact extends far beyond that, as was uncovered in the Panama Papers leaks of 2016, where we found out how billions of dollars hidden through shell companies was used to finance criminals, insurgents, and dictatorships. Post demonetisation, over two lakh shell companies in India were cancelled by the government.

As the global crackdown on shell companies continues, we must remember that the most effective way to tackle the menace is to stay true to the oldest mantra in the world of business and government: Follow the money.