Black Money Rampant In Realty Deals, Finds Sting Op – Times of India – 28-Nov-2014

December 2, 2014 - Uncategorized

An undercover operation by investigative website Cobrapost has blown the lid off many real estate companies that it claimed are willing to accept and launder black money in property transactions.

The expose of 35 real estate companies shows they were willing to take illegal money and convert it into legit by allowing their clients to buy properties. The portal claimed executives of these companies were willing to do bulk property transactions and accept 10-90% of the property value in black money. Those purportedly caught on tape included two CMDs, 10 managing directors, 15 directors and executive directors, three CEOs and COOs, a president and a vice-president and several other senior functionaries of these companies.

According to the tapes, one employee even offered to take Rs 100 crore in black and convert it into white with help from non-banking finance companies. The officials are shown on the tapes as saying that accepting payments in black is nothing new and is a norm for the real estate industry. Some even said they were ready to accept black money abroad through the hawala route.

“All this endorses the fact that rampant use of black money is a well-known reality of the realty sector in India,” said Cobrapost editor Aniruddha Bahal.

Bahal pointed out that if estimates by consultancy firm Liases Foras are to be believed, about $6 billion or 30 per cent of total transactions in the country’s real estate sector were done in black in 2012. “However, these figures may not reflect the truth completely as real estate business, which is largely unregulated, accounts for more than a tenth of India’s $1.85 trillion economy. The loss to the national exchequer in terms of tax evasion might be much more than what has been projected in such market studies,” he said.

The 35 real estate companies covered in the sting operation have pan-India presence across nine states. The executives caught on tape offering assistance to launder black money are from well-known companies based in Delhi and its suburbs such as Noida, Gurgaon and Ghaziabad besides Jaipur, Mumbai, Lucknow, Hyderabad, Bangalore and Kochi.

Many were shown agreeing to collect cash from cities other than their operational bases and even at places abroad such as Dubai through hawala transactions. They purportedly offered to understate the sale price of the property so that the buyer can save on stamp duty, and proposed to sell an undeveloped property even without obtaining necessary approvals for the project.

The sting operation’s revelation came a day after black money issue was discussed in Parliament with the government assuring that it would leave no stone unturned to get back illegal wealth stashed away in foreign banks.

 

Times of India

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