Karnal Singh, former director of the Enforcement Directorate (ED)
How does black money become white? This question arises in everyone’s mind. Karnal Singh, former director of the Enforcement Directorate (ED), opened such a raw-chill of this black game that the mind should be baffled. In a podcast with Raj Shamani, Singh told how clever criminals and corrupt leaders legalize black money in the trap of bank, real estate and fake companies.
According to a news from Hindustan, Karnal Singh clearly told that the easiest way to make black money white is the banking system. People put their black money in real estate or send them abroad through hawala. Not only this, some people make a mess in the name of business.
Singh says, “People send big money out of the country by making fake bills or over-invoicing and under-invoicing. Many people in India buy property by benami names or make business in the name of someone else.” That is, money, but someone else’s name. Just like this, black money becomes valid in pinch.
₹ 10 share sold for ₹ 25,000!
Singh narrated such an anecdote that the mouth should be open after hearing it. He said, “Suppose someone has illegal money. He takes a loan from the bank, starts a business and puts black money in it through fake challan. Even if the business is running on paper, but revenue is shown. Then that money starts to look valid.”
In the podcast, former ED chief said, a big politician from Maharashtra laid a network of 300-400 fake companies. A small amount of Rs 45,000 was sent to these companies. Because the financial intelligence unit has to be told at a transaction of more than Rs 50,000. Then this money used to roam in many bank accounts and finally came back in the name of investment in the same politician’s company. He sold a shares of ₹ 10 for ₹ 25,000 and later bought it back for ₹ 2. Money also back, shares back too! And thus black money turned white.
Not every fake company is illegal
Singh also made it clear that not every fake company is illegal. He said, “Many times people make fake companies for future business, so that they can keep account of initial expenses. But when the company is only for cash rigging, without any real work, then doubt starts from here.”
Bank of Baroda scam took place in clever ways
Singh mentioned one of the most clever methods of money laundering – Bank of Baroda scam. In this case, ₹ 3,600 crore was sent abroad on the pretext of import, which never reached its hideout. 13 bank accounts were used. When the investigation took place, it was found that the directors of these accounts were people living in slums, who were given ₹ 10,000 every month. Fake offices were closed after KYC was completed. More bills were made in the name of exports and money was brought back by taking advantage of the duty draback scheme.