A investigation team recently found that some foreign companies are involved in the full active business with sales & service transactions but they have opened only liaison office in Bangladesh. “Ingersoll Rand Netherlands B.V. (Bangladesh Branch)” is one of them.
In reality the business is an Indian company and controlled from Kolkata, but the company is registered in the name of the Netherlands. Sources confirmed this illegal (Do not want to be disclosed).
According to the Bangladesh Investment Development Authority (BIDA) and the Registrar of Joint Stock Companies and Firms (RJSC), a foreign company registered as a liaison office cannot engage in any direct business activities. This means that the liaison office will not be able to carry out any commercial activities.
“Commercial activities” here mean those activities through which money can be earned. For example any engagement of direct product sales or providing service jobs that can generate income.
The business that Ingersoll Rand Bangladesh Branch operates through the Liaison Office in Bangladesh is not matching with the rules of “Liaison Office” as defined. The activities of Ingersoll Rand Bangladesh Branch is the same as a “Private Limited Company” can do.
According to the Companies Act 1994, Section 2 (q) of the Bangladesh, If a foreign company wants to do business by registering a private limited company in Bangladesh, some essential conditions have to be fulfilled, such as minimum capital declaration (which will be considered as foreign investment here), at least two directors, vat and tax registration, full office, warehouse etc.
But the business that Ingersoll Rand operates through the Liaison Office only with permission from Bangladesh Investment Development Authority (BIDA).
This Dhaka based company has swindled at least $12 million business from some of the country’s leading textile, garments, cement and steel plants in the last three years without heeding the rules. Two of the seven workers are Indians (without work permits) and the other five are Bangladeshis. Four are engaged in direct sales and three in engineering services.
Behind the liaison office, their main job is to sell machinery. The company Ingersoll Rand Bangladesh, which sells air compressors mainly, earned USD 59000 last year from repairs and overhauling services alone. All of which were smuggled into India through hundi by two Indian nationals, Abhishek Chowdhury and Gautam Basu.
The activities of the service engineers in the liaison office are ridiculous, but the main reason is to make money by evading taxes and VAT.
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If Ingersoll Rand Bangladesh Branch had conducted business through a private limited company based on their current activities in Bangladesh according to proper rules, The Government of Bangladesh would have been able to generate huge revenue from vat and tax from the $12 million business transaction.
The BIDA, RJSC and law enforcement agencies should scrutinize the activities of these companies and bring them under the law. Sources confirmed that the company did not registered properly for tax evasion. It is not legal. This story’s limitation is our investigator could not reach the Ingersoll Rand for their opinion. When we have their speech, we will update our story.