Much has been debated about Swiss bank accounts, but a new expose by an international group of journalists has thrown light on how the well-oiled mechanisms of tax havens are used to stash away wealth, particularly by 612 Indians.
According to a report in The Indian Express, there are 612 Indians on the list of those who have accounts and funds in corporate entities in the tax havens. The list includes many businessmen who may have stashed funds away in violation of existing banking and forex laws in India.
A preliminary list of names published in the report include the following: Congress Lok Sabha MP Vivekanand Gaddam from Andhra Pradesh, Rajya Sabha MP and UB Group Chairman Vijay Mallaya, Vice Chairman of the Essar Group Ravikant Ruia, Executive Director of KK Modi Group Samir Modi, Dabur group's Chetan Burman, Abhey Kumar Osawl, MD of Oswal Spinning and Weaving, Director of MRF Rahul Mammen Mappillai, Satyam founder Ramalinga Raju's son Teja Raju and Vice Chairman of Indiabulls Group Saurabh Mittal.
Merely being on the list does not, of course, mean the people named may have done something illegal. But a judgment on this will have to wait till further details are unveiled. But it is worth pointing out that some of the people named are non-resident Indians, and they may well be within their rights to hold accounts in any tax-haven they please. They will only have to be in compliance with the laws of the countries they reside in.
The list compiled by the International Consortium of Investigative Journalists (ICIJ), an independent cross-border network of reporters who work on investigative journalism, was culled from data that runs into 2.5 million secret files of over 260 gigabytes. The group worked with media groups across the world to analyse the data.
The ICIJ, during their work also focussed on the role of two offshore firms, Portcullis TrustNet in Singapore and Commonwealth Trust Limited (CTL) in the British Virgin Islands, which the group claims have "helped tens of thousands of people set up offshore companies and trusts and hard-to-trace bank accounts."
The ICIJ has found that Swiss banks that had tied with the Singapore firm, that claims to be a 'one-stop shop' for people looking to stash away funds in tax havens. According to the group, the funds are often used for buying luxury items like mansions, yachts and art and getting tax breaks as well.
Indian regulations, while allowing Indians to remit upto $200,000 annually abroad, don't permit stashing away of funds in a known tax haven. In the cases of the Indians on the list, they have reportedly chosen either to directly create companies in the tax havens abroad or acquire a majority stake in the companies created in the tax havens, both of which are frowned on by Indian regulators, says the Indian Express.
The others, while not listed in today's report, reportedly include "the mega-rich and tax offenders". However, in this case the names of those not published may be more interesting than those the nine that made it to print today.