A disciplinary action is likely to be taken by the government against 400 Chartered Accountants and Company Secretaries for allegedly incorporating Chinese shell companies in the country by flouting norms and rules, according to a report by leading daily The Hindu.
Last month, various media reports surfaced suggesting the government was looking at winding up companies with Chinese links under the scanner of the ministry of corporate affairs (MCA). While the probe into the companies which have related-party transactions or liabilities like loans availed from banks or other financial institutions will continue, the view has been to wind up the rest for good, reports said.
These measures by the Centre were part of a series of actions against Chinese business entities after the 2020 Galwan clash in which 20 Indian soldiers were killed in fight with with the Chinese army.
Earlier this year, after an alert sounded by the central home ministry about Chinese nationals on-board Indian companies for causing economic distress and such companies could be vehicles for money laundering or illegal political funding, in a major crackdown MCA registered over 700 cases across the country against such companies. The FIRs were filed under certain sections of the Indian Penal Code (IPC) including those pertaining to cheating and forgery and certain sections of the Information Technology Act.
With regard to the possible disciplinary action to be taken by the government against CAs and CS, a senior government official told the daily that these professionals against whom action was initiated had helped incorporate a large number of Chinese-owned or Chinese run shell companies in major cities without adequate compliance of rules and law.
The Ministry of Corporate Affairs (MCA) recommended the discilplinary action after receiving inputs from financial intelligence units in the last two months.
The Institute of Chartered Accountants of India (ICAI) said in a statement to the English daily that the “Disciplinary directorate of ICAI is in receipt of complaints from office of various Registrar of Companies across the country against CA professionals for their involvement in relation to companies alleged to be linked with Chinese nationals.”
“The said complaints are being processed in terms of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007. Hence, guilt, as alleged, as well as the number of Chartered Accountants alleged to be involved, is yet to be ascertained/determined after conducting detailed investigation/inquiry, so, it is premature to comment upon the same,” the ICAI said.
