No licenses yet for Harford medical marijuana firms

Brian Sanchez

No licenses have been issued for medical marijuana dispensaries, growers or processors based in Harford County, but the state’s licensing process is beginning to pick up steam with final approvals granted for a handful of licenses earlier this week during a meeting of the Maryland Medical Cannabis Commission in Bel Air.

The commission, which has been holding its meetings in different parts of the state, is scheduled to meet again in Bel Air on Aug. 28 regarding more final approvals.

Medical marijuana was legalized in Maryland in 2013 with approval by the General Assembly.

“I wish the process would speed up — you have patients that need it,” state Sen. J.B. Jennings, who represents eastern Baltimore County and western Harford in Annapolis, said. He voted for the legislation four years ago.

Officials will also be mindful of the dispensaries’ proximity to schools and houses of worship, she said.

“We don’t have any plans at this time to alter the zoning code, but of course it’s new,” Mumby said. “It’s new for everyone in the state, so the county executive wants to be thoughtful about the process.”

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Germany’s glass ceiling: Firms given one year to appoint women

Brian Sanchez

Germany’s family minister has cornered German firms: Either they name women in management positions now, or they will have to comply with gender quotas in one year. EURACTIV’s partner Ouest-France reports.

Federal Minister of Family Affairs Katarina Barley, gave German companies an ultimatum on Wednesday (16 August) to nominate more women in managerial positions, and threatened to introduce compulsory gender quotas if they don’t comply.

“I am giving the private sector one year to solve this issue by itself,” said the social-democratic minister during an interview to the newspaper group Redaktionsnetzwerk Deutschland (RND).

“If nothing happens in this span of time, we will intervene legally,” she added.

Germany lags behind in employing women in positions of power.

“I will not shy away of binding quotas for women in managerial boards,” the minister underlined in the midst of the electoral campaign for the legislative elections happening on 24 September, where her centre-left party, the Social Democrats (SPD), is trailing by about 15% of the vote.

6,5% of women in managing boards

The SPD, currently the minority partner in coalition with Angela Merkel’s Christian Democrats (CDU), could become the opposition party after the ballot.

“Time has shown that voluntary guidelines don’t work,” she added.

W20 Summit champions women’s interests ahead of G20

At the Women20 Summit in Berlin, female leaders from around the world discussed how to promote economic empowerment of women on the agenda of a still male-dominated G20 leadership. EURACTIV Germany reports.

Since January 2016, more than 100 German publicly listed firms must employ 30% of women in their supervisory board, who oversees salary and working conditions.

The law had been imposed to conservative chancellor Angela Merkel by its social-democrat ally, SPD.

But in managing boards (the selected few working directly with business owners), female presence is low. According to DIW, an economic research institution, the share of women in 106 managing boards of the largest German firms was only 6.5% in 2016.

A continued need for change

Women were better represented in these firms’ supervisory boards at 27%.

Germany has long been considered a country where women find it hard to combine career aspirations and family.

Despite the little progress achieved in recent years, the mindset still has to change, especially in the country’s south, which is more conservative.

A European problem

In the first half of 2017, women accounted for 24.6% of board members in the largest publicly listed companies in 35 European  countries, according to the European Institute for Gender Equality. Almost one in four board members is a woman.

This shows a 1.3% percentage point increase over a one year perios, and is more than double compared to only 10.4% ten years ago.

Norway, Sweden and France are the countries that are faring better, with percentages above the 40% mark. Malta holds the negative record, with only 7% of women sitting in managing boards, Followd by Estonia with 7.4%, and Romania with 8.4%.

In 2012 the European Commission proposed legislation to achieve 40% of women in non-executive managing positions (or 33% of both executive and non-executive positions), or else face penalties including exclusion from public tenders for companies which failed to introduce transparent appointment procedures.

However, proposed legislation has been blocked by the Council on two occasions, by a blocking minority formed by Croatia, Denmark, Estonia, Germany, Hungary, Slovakia, the Netherlands and the United Kingdom.

The European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, Marianne Thyssen, expressed the hope that there would be a breakthrough during the Estonian presidency, which started in mid 2017.

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Tech Firms Ban White Supremacists, Shifting From Hands-Off Policy – Update

Brian Sanchez 

By Yoree Koh and Jacob Gershman

Technology companies’ recent moves to address white supremacists thrust them into unusual territory for corporations that often take a more hands-off approach toward who uses their services and how.

In the wake of weekend violence at a white supremacists’ rally in Charlottesville, Va., Alphabet Inc.’s Google and GoDaddy Inc. stopped providing hosting support for the Daily Stormer, a neo-Nazi site that the companies said violated their terms of service. Airbnb Inc. banned participants in the rally from staying in rentals booked through its site.

Uber Technologies Inc. blacklisted white supremacist James Allsup after Mr. Allsup and another passenger allegedly made racist remarks to their driver in Washington, D.C., on Friday night. In a video Mr. Allsup posted on Twitter, Mr. Allsup is heard asking the driver, “how are we racist?” Crowdfunding site GoFundMe removed campaigns to raise money to bail out the driver charged with speeding into a crowd of counterprotesters on Saturday, which killed 32-year-old Heather Heyer.

Facebook Inc. said it removed on Tuesday the profile of Chris Cantwell, a white supremacist who was featured in a Vice documentary on the Charlottesville protests. The company also said it took down at least eight accounts and pages related to white supremacist groups, such as “White Nationalists United.”

On Wednesday, Twitter Inc. suspended the Daily Stormer’s account. A Twitter spokesman said that while he cannot comment about individual accounts, “The Twitter Rules prohibit violent threats, harassment, hateful conduct, and multiple account abuse, and we will take action on accounts violating those policies.”

Also on Wednesday, web security startup Cloudflare said it closed Daily Stormer’s account, making the site slower and more vulnerable to attack. Cloudflare co-founder and CEO Matthew Prince said in a blog post that while the company had wanted to remain “content neutral as a network” Daily Stormer’s claims that “we were secretly supporters of their ideology” pushed Cloudflare to cut the site off.

Behind the swift action from the firms lie considerations about freedom of speech and the legal application of company policy, which seems to vary depending on who the end user is. Companies that are considered communications platforms have the greatest leeway to enforce policies that bar certain users, legal experts say.

Tech companies “certainly have the right to make their own judgments about what’s in the terms of service and whether it’s being violated,” said Mike Yang, former general counsel at Pinterest Inc. and a former deputy general counsel at Google.

Recently, the debate about what kind of speech tech firms allow on their platforms has focused on companies such as Facebook, which has hosted fake news as well as violent live videos, and Twitter, which has ramped up efforts to remove some accounts from its site.

Following the violence in Virginia, domain registrars — which act as intermediaries by making sure that a website’s domain name is linked to the correct IP address — have also become arbiters of free speech. If a registrar pulls service from a site, the site will appear offline to the public until it finds another registration provider.

“The number of net intermediaries acting as gatekeepers has increased” since GoDaddy booted Daily Stormer, said Daphne Keller, who studies platforms’ legal responsibilities at the Stanford Center for Internet and Society. “Suddenly the domain registrars are sitting in judgment on content and speech,” joining the usual players around free speech such as Google, Facebook and Twitter. Now that Cloudflare has pulled the plug on Daily Stormer, security and domain name servers can be added to the list, a move that Mr. Prince says was a dangerous one to make, in part, because of the risks that come with getting involved in “content policing.”

Domain registrar GoDaddy said that while it doesn’t usually take actions on complaints that would “constitute censorship of content,” it decided that an article Daily Stormer posted ridiculing Ms. Heyer crossed the line “to promoting, encouraging, or otherwise engaging in violence against any person.” On Sunday, it gave Daily Stormer 24 hours to find a new registrar.

Daily Stormer then registered on Google. Hours later, Google canceled Daily Stormer’s website-hosting registration, saying the site violated Google’s policies against inciting violence. Daily Stormer, whose site was inaccessible Tuesday, didn’t respond to a request to comment.

Daily Stormer has reappeared on the web under what appears to be a new domain name, indicating it had found a new domain registrar. That address appeared to be offline on Wednesday after Cloudflare discontinued its service. It will be able to reappear once that domain name moves to a new domain name server provider.

Many of the actions that companies have taken against supremacists would probably be unconstitutional under the First Amendment if imposed by an elected official or public agency, experts say. The First Amendment’s protections of speech and expression are restrictions on government power.

“In general, the First Amendment is no barrier to discrimination on the basis of ideology or speech by a private person or entity,” said Dale Carpenter, a constitutional law professor at SMU Dedman School of Law in Dallas.

Airbnb rejected the reservations of some visitors to Charlottesville after it said it learned earlier this month that they were planning to stay in and organize “a series of after parties at several Airbnb listings while in town to attend this terrible event,” the company said in a statement. The company pointed to its community commitment as the reason for rejecting their reservations.

“We require those who are members of the Airbnb community to accept people regardless of their race, religion, national origin, ethnicity, disability, sex, gender identity, sexual orientation, or age,” the company said. “When we see people pursuing behavior on the platform that would be antithetical to the Airbnb Community Commitment, we take appropriate action.”

However, companies such as Airbnb and Uber could face more challenges to applying their policies because the business segments they operate in open them up to a host of local laws, experts say. Businesses that offer their services to the public must comply with state and local laws banning various kinds of discrimination. Those laws typically protect against discrimination on the basis of race, religion, ethnicity and gender. Unless a company is targeting supremacists because of their gender or race, those laws probably wouldn’t apply, according to UCLA constitutional scholar Eugene Volokh.

That isn’t true everywhere. A few places like Seattle have laws that also ban discrimination on the basis of political ideology. Seattle’s public accommodations law says a business can’t turn away a patron because of conduct “reasonably related to political ideology” unless the customer’s conduct would “cause substantial and material disruption” of the owner’s property rights.

In California, where antidiscrimination laws are particularly strong, its courts ruled that a German restaurant in Torrance couldn’t evict patrons just for wearing swastika pins. An unsubstantiated fear of “troublemakers” didn’t justify a topless bar owner in San Diego in denying admission to men displaying motorcycle club insignias, under a separate ruling.

Airbnb has argued in lawsuits against cities like San Francisco and Anaheim, Calif., that it is a communications platform, putting it in the same class as Facebook or Twitter, not a short-term rental business. The lawsuit against San Francisco was settled in May without a clear resolution on whether Airbnb is a communications platform. Anaheim appeared to recognize Airbnb as a communications company.

For Airbnb, excluding renters based on their racist views is a shift from last year, when the company changed how information is shared on its site after renters said hosts discriminated against them for race or other characteristics.

Write to Yoree Koh at yoree.koh@wsj.com and Jacob Gershman at jacob.gershman@wsj.com


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Crackdown on black money: Centre steps up scrutiny of shell firms

Brian Sanchez

When Prime Minister Narendra Modi banned high-denomination currency bills in a surprise move on November 8, 2016, authorities noticed a surge in shell companies depositing cash in banks, seemingly in a bid to hide who owned that wealth.

The moment, said a top aide to Mr. Modi, was an eye-opener for the government, which had not realised just how much shell companies were being used to hide assets and launder money.

Mr. Modi’s office has formed a team of top law enforcement and revenue officials to go after such companies, according to the aide and a government memo reviewed by Reuters.

In July 2017, the authorities ordered nearly 200,000 shell companies to be shut down, and the aide said the government is examining hundreds of thousands more.

The systematic crackdown on shell companies — which have no active business operations or assets — is perhaps one of the most tangible outcomes of demonetisation, which aimed to hit tax evasion and move India toward cashless, digital transactions that leave a paper trail.

“We are very much at war against black money. The impact of this (crackdown) will be huge on shell companies,” the aide, who cannot be named in line with government rules, told Reuters.

In his Independence Day address on August 15, 2017, Mr. Modi claimed credit for going after these companies, and warned that “looters of the nation’s wealth will have to answer”.

While the move to withdraw 85% of bank notes shook the economy and was widely criticised, the fight against unaccounted wealth carries overwhelming support from ordinary Indians who often have to pay bribes for government services.

Shops and houses are pictured inside the Mercantile office building at 9/12, Lalbazar Street in Kolkata on August 14, 2017.   | Photo Credit: REUTERS

 

A high-level task force leading the investigation has found hundreds of shell companies are registered in a few buildings in the eastern city of Kolkata, according to the government note reviewed by Reuters.

More than 400 companies listed their address in a dimly-lit colonial-era building at 9/12 Lalbazar Street.

In its warren of offices were firms offering services such as earthmoving equipment, infrastructure financing, information technology consultants and many others which had office space the size of cubicles.

Many were locked, with their padlocks coated in dust. Others were grimy residential quarters with laundry hanging from the windows.

Data separately provided by Tofler, a company information database service, identified nearly 3,000 companies in two offices in the building. Some were named after flowers.

A tax inspector said the Kolkata firms were a virtual money laundering industry and drew a parallel to the Panama legal firm Mossack Fonseca that emerged from obscurity last year after the leak of millions of documents from its offices that illustrated how the wealthy use offshore corporations to avoid taxes.

“The Kolkata industry does the work of obfuscating money trails. Kolkata companies are a huge network that take your money from one end and bring it out the other,” said the inspector, who didn’t want to be identified as he’s not authorised to talk to the media.

Fraud and embezzlement

A man goes down the stairs inside the Mercantile office building at 9/12, Lalbazar Street, in Kolkata on August 14, 2017.   | Photo Credit: REUTERS

 

The shell companies support much of the fraud and embezzlement in India, tax authorities say.

The owners of these companies create elaborate smokescreens, including naming personal servants and chauffeurs as board directors, the tax inspector said, adding they are used to obscure the ultimate beneficiaries, conceal political investment, route money to evade tax, commit fraud or manipulate tenders.

Last week, the Securities Exchange Board of India imposed trading restrictions on 162 listed entities as shell companies as part of its broader crackdown on illegal offshore transfers and tax evasion.

Several firms identified in the list of front companies have challenged the decision, saying they were engaged in legitimate business.

The Serious Fraud Investigation Office is creating a database of shell companies, and has so far identified 114,269 as front firms.

The database contains details of those involved in the shell company ‘ecosystem’, from those who set up the companies to the beneficiaries of laundered money and the professional mediators who bring the operators and beneficiaries together, the government note said.

More than 370 front companies were listed at 23A Netaji Subhash Road, another site in Kolkata, according to the note.

Sujit Kumar Mukherjee, the secretary of the 23A Tenants Association, said he was not in a position to say if there were front firms operating from the building. “It is very difficult to say who is doing what behind the front door,” he said.

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After shell firms, govt looks to weed out defunct LLP firms

Brian Sanchez

As a follow-up to its drive against suspected shell companies, the government has now turned its focus on growing number of Limited Liability Partnership (LLPs) firms. There has been a spike in the number of LLPs over the last two-three years to tide over the higher compliance requirements under the new company law. According to the latest data from Ministry of Corporate Affairs, there are 94,304 active LLPs, as of June 2017. On an average 2,500 to 3,000 LLPs get registered every month, say corporate lawyers. 

“Registrar of Companies is on a spree of striking-off the defunct LLPs from its register,” says Vikas Gupta, partner, Nangia & Co.

In his Independence Day speech, Prime Minister Narendra Modi said the government has identified over three lakh shell companies and registration of 1,75,000 such companies had been cancelled. The government has been on a drive against the generation of black money and money laundering through use of shell companies.

What has caught the attention of government is the steady rise in the number of LLPs registered in course of the last one year, peaking at 3,518 in March 2017. The period from April to June 2017 saw no let-up in the creation of LLPs with 8,019 getting registered in the three months, as per MCA data. Many legal experts feel the demonetisation of high-value currency notes in November last year has given a fillip to LLPs.

An analysis of the nature of business of these LLPs in the April-June period shows that bulk of them are business services (46 per cent), followed by manufacturing and trading (12 per cent each), community, personal and social (nine per cent), construction (eight per cent), real estate and renting (six per cent), among others. Experts say LLPs are getting a wider appeal among businesses, other than services.

Since the time the Companies Act, 2013 came into effect in April 2014 there has been a trend of converting existing companies into LLPs and creation of new LLP firms. Around 6,000 companies converted to the LLP structure as of June 2017. No government approval is required for conversion of certain companies to LLPs.

What has caught the fancy of the business owners was the minimal compliance and regulatory requirements under LLP structure. On an annual basis, an LLP is only required to file Annual Return and a Statement of Account & Solvency. All other filings are event-based, triggered by any change in LLP partners, retirement, resignation, change of address, among others.

What has also come as a shot-in-the-arm is that over the last two years the government and the Reserve Bank of India have liberalised norms for allowing foreign direct investment in LLPs, while allowing the appointment of foreign partners. Recent RBI amendment has allowed LLPs to avail of external commercial borrowing (ECBs), including masala bonds. Going forward legal experts expect LLPs to attract the greater slice of foreign direct investment.

As per Section 75 of Limited Liability Partnership Act, 2008 and the Rules, the Register of Companies (RoC) could suo moto take action against an LLP if it does not carry out any business or profession for a period of two year or more. The RoC could deregister the LLP if it is not satisfied with the reasons given by the firm for its inactivity, says Hitender Mehta, partner, Vaish Associates Advocates. An LLP on its own could also apply for de-registration if it has not carried out business or operation for a period of one year or more. “In case of an active LLP winding-up can be initiated voluntarily or by tribunal only,” says Nishit Dhruva, managing partner, MDP & Partners.

Most experts expect de-registration of defunct LLP firms to gather steam in the coming months.

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The top Merseyside firms named and shamed for ‘underpaying staff’

Brian Sanchez

Liverpool’s famous Krazyhouse club and a Wirral McDonald’s franchise are among hundreds of firms named and shamed by the Government tonight for underpaying staff.

The Department for Business, Energy and Industrial Strategy (DBEIS) has published a list of 233 firms it says failed to pay the National Minimum Wage or Living Wage.

Nine Mersey firms are on the list, including well-known city centre restaurant Il Forno – which says it is “outrageous” it has been included on the list over a mistake.

The Government says that 13,000 workers will get around £2m in back pay from the 233 businesses. Those firms have also been fined a record £1.9m.

It says: “Common errors made by employers in this round included deducting money from pay packets to pay for uniforms, failure to account for overtime hours, and wrongly paying apprentice rates to workers.”

Business Minister Margot James said: “It is against the law to pay workers less than legal minimum wage rates, short-changing ordinary working people and undercutting honest employers.

“Today’s naming round identifies a record £2m of back pay for workers and sends the clear message to employers that the government will come down hard on those who break the law.”

The Krazyhouse, Wood Street, Liverpool

Melissa Tatton, Director at HM Revenue and Customs said: “HMRC is committed to getting money back into the pockets of underpaid workers, and continues to crack down on employers who ignore the law.

“Those not paying workers the National Minimum or Living Wage can expect to face the consequences.”

Here are the Mersey firms named for by the Department for Business, Energy and Industrial Strategy (DBEIS)for National Minimum Wage underpayment

The ECHO attempted to contact all local companies on this list.

* Il Forno in Liverpool underpaid £261.83 to one worker.

Spokesman Tim Molloy said that naming the restaurant on the list was “a joke”.

He added: “Il Forno is a long-established business that has always paid the minimum wage. This is an innocent mistake.

“It’s about one employee who was at their request partly paid in childcare vouchers.

“Then the minimum wage people pitch up and say ‘you can’t include that as minimum wage’. Even though they cost the business money and were paid to the individual, it doesn’t count.

Il Forno on Duke Street, Liverpool

“We were unaware there was a breach.

“For HMRC to list Il Forno on a list of businesses that have breached the minimum wage is really outrageous. We’ve said as much to the Revenue.

“I find it utterly inexplicable that HMRC or the Government would encourage businesses to use childcare vouchers and then then when you use them, this happens.”

* Cashnext Ltd, trading as The Krazy House in Liverpool, underpaid £1,012.29 to two workers

* Lipstick, Powder and Polish salon in Woolton underpaid £477.66 to one worker.

A spokeswoman for the business said: “It was an accounting error and it has been paid back”.

* JR’s Pet Shop in Moreton underpaid £458.84 to one worker.

Owner Jorge Ramos told the ECHO that the underpayment was a mistake and that the money had been paid.

* McDonald’s franchisee P Griffiths Foods, of Bromborough, underpaid £420.16 to 41 workers.

A McDonald’s spokesperson said: “We can confirm that following a standard HMRC review, the necessary steps were taken by our franchisee and the case was closed in late 2016.”

* Nursery the Wendy House (Wirral) underpaid £404.38 to one worker.

* Small Wonders Day Care Nursery (Thatto Heath) of St Helens underpaid £3,372.65 to 11 workers.

* St Helens firm Solarcrown (UK) – whose name has now changed to SCUKL 2016 and which once traded as Solarking, underpaid £3,227.28 to seven workers.

SCUKL 2016 is now in liquidation and its liquidators Cowgill Holloway declined to comment.

Its SCUKL 2016 brand names have now been taken over by another unconnected company.

* Model Me salon in Southport underpaid £1,367.56 to seven workers. That business has since been taken over by another firm.

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Scots firms ‘named and shamed’ for not paying minimum wage

Brian Sanchez

Nineteen Scottish firms have been “named and shamed” for failing to pay the minimum wage and ordered to pay more than £35,000 to workers who found themselves short-changed.

A total of 90 staff across Scotland are to receive a chunk of the £2 million back pay across the UK being given out to those who were underpaid.

Shops, a motor mechanics firm and hairdressing businesses are among the offenders in Scotland, it has been revealed.

Scotland Office Minister Lord Duncan said: “Life is tough enough for folks today without employers trying to diddle their workers out of their entitlement.

READ MORE: BBC ‘discrediting SNP’ over Charlottesville ‘nationalists’

“The UK government’s national living wage was established to ensure that everyone, everywhere, receives a decent income. To hear that there are still companies that believe they can get away with underpaying their staff is unacceptable. If it takes naming and shaming to ensure that employers wake up to their responsibilities then the UK government will not shirk from that task. Workers need to know that we have their back on this one.”

The Fish and Chip Ship Ltd in West Dunbartonshire faces the highest Scottish bill in the UK government scheme to crack down on offenders.

Officials said the firm failed to pay £4,900 to nine workers.

DSL Accident Repair Ltd, based in Edinburgh, is next on the list with £4,896 owed to three workers, while the Rainbow Room (Clarkston) Ltd, which has since changed names, failed to pay £4,532 to 21 workers.

A Scottish Government spokeswoman said: “We are using all powers at our disposal to promote fair pay. We are doing this through our approach to fair working practices in procurement, our support for living wage accreditation, the business pledge and the Fair Work Convention.

“We would encourage employers across Scotland to ensure that they are paying staff the legal minimum wage rate.”

READ MORE: Andrew O’Hagan: Britain ‘smashed’ by Brexit and Scotland under threat

Since the scheme was introduced in 2013, 40,000 workers have received back pay totalling more than £6m, with 1,200 employers fined £4m.

Current national minimum wage rates range from £7.50 an hour for those aged 25 and over to an apprentice rate of £3.50 an hour.

Across the UK, workers at 233 businesses will receive back pay in the latest round of payments totalling around £2m, while employers have been fined £1.9m in total by the UK government.

A spokeswoman for Citizens Advice Scotland said the figures highlight the problem that still exists with rogue employers.

She added: “CAB advisers see so many people now who are in work, and are struggling because of low wages or unfair employment practices which can place them in extremely difficult situations.”

Reasons given by employers for underpaying workers included deducting money from pay packets to pay for uniforms, not paying workers for overtime hours, and paying apprenticeship rates to workers.

Shadow Scotland Office Minister Paul Sweeney said: “Any trader or business found not to be paying the minimum wage should face the full force of the law.”

Liberal Democrat leader Willie Rennie said it was right to throw the spotlight on firms responsible.

“It is completely unacceptable for firms to think that they can get away with underpaying their staff,” he said.

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Crackdown on ‘black’ money, India steps up scrutiny of firms

Brian Sanchez

NEW DELHI/KOLKATA: When India´s Prime Minister Narendra Modi banned high-denomination currency bills in a surprise move late last year, authorities noticed a surge in shell companies depositing cash in banks, seemingly in a bid to hide who owned that wealth.

The moment, said a top aide to Modi, was an eye-opener for the government, which had not realized just how much shell companies were being used to hide assets and launder money. Modi´s office has formed a team of top law enforcement and revenue officials to go after such companies, according to the aide and a government memo reviewed by Reuters.

Last month, the authorities ordered nearly 200,000 shell companies to be shut down, and the aide said the government is examining hundreds of thousands more. The systematic crackdown on shell companies – which have no active business operations or assets – is perhaps one of the most tangible outcomes of demonetization, which aimed to hit tax evasion and move India toward cashless, digital transactions that leave a paper trail.

“We are very much at war against black money. The impact of this (crackdown) will be huge on shell companies,” the aide, who cannot be named in line with government rules, told Reuters.

In his Independence Day address on Tuesday, Modi claimed credit for going after these companies, and warned that “looters of the nation´s wealth will have to answer. “Modi took office in 2014, vowing to fight corruption and bring back billions of dollars stashed away overseas as well as in real estate, stock markets and front companies through a web of fictitious names.

While the move to withdraw 85 percent of bank notes shook the economy and was widely criticised, the fight against unaccounted wealth carries overwhelming support from ordinary Indians who often have to pay bribes for government services.

A high-level task force leading the investigation has found hundreds of shell companies are registered in a few buildings in the eastern city of Kolkata, according to the government note reviewed by Reuters.

More than 400 companies listed their address in a dimly-lit colonial-era building at 9/12 Lalbazar Street. In its warren of offices were firms offering services such as earthmoving equipment, infrastructure financing, information technology consultants and many others which had office space the size of cubicles.

Many were locked, with their padlocks coated in dust. Others were grimy residential quarters with laundry hanging from the windows. Data separately provided by Tofler, a company information database service, identified nearly 3,000 companies in two offices in the building.

Some were named after flowers. A tax inspector said the Kolkata firms were a virtual money laundering industry and drew a parallel to the Panama legal firm Mossack Fonseca that emerged from obscurity last year after the leak of millions of documents from its offices that illustrated how the wealthy use offshore corporations to avoid taxes.

“The Kolkata industry does the work of obfuscating money trails. Kolkata companies are a huge network that take your money from one end and bring it out the other,” said the inspector, who didn´t want to be identified as he´s not authorised to talk to the media.

The shell companies support much of the fraud and embezzlement in India, tax authorities say. The owners of these companies create elaborate smokescreens, including naming personal servants and chauffeurs as board directors, the tax inspector said, adding they are used to obscure the ultimate beneficiaries, conceal political investment, route money to evade tax, commit fraud or manipulate tenders.

Last week, the Securities Exchange Board of India imposed trading restrictions on 162 listed entities as shell companies as part of its broader crackdown on illegal offshore transfers and tax evasion. Several firms identified in the list of front companies have challenged the decision, saying they were engaged in legitimate business.

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