A huge new leak of financial documents, called the Paradise Papers, has revealed how the world's powerful and ultra-wealthy, from politicians to corporates to celebrities, stash away their wealth in offshore tax havens. More than 700 Indians were named in the massive investigation, leaving India ranked 19 among the 180 countries whose citizens and companies were found to have reportedly sheltered their wealth in secretive tax havens abroad.
What are Paradise Papers?
The Paradise Papers are a journalistic investigation of financial documents leaked from two law firms, for which more than 380 journalists have spent a year combing through data that stretches back 70 years.
The details come from a leak of 13.4 million files on Sunday that expose the global environments in which tax abuses can thrive: And the complex and seemingly artificial ways the wealthiest corporations can manipulate legal loopholes to evade taxes and protect their wealth.
The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists with 95 other media organisations including The Guardian, the BBC and several others. The Indian Express probed the 714 Indian firms, individuals and entities linked to the offshore firms.
Most of the data came from Appleby, a Bermuda-based legal services provider and Singapore-based Asiaciti, which facilitated setting up of offshore firms with low or zero tax rates.
Some of the revelations in the Paradise Papers include millions of pounds from Queen Elizabeth II's private estate that has been invested in a Cayman Islands fund and some of her money that went to a retailer accused of exploiting poor families and vulnerable people.
It details extensive offshore dealings by US president Donald Trump's Cabinet members, advisers and donors, including substantial payments from a firm co-owned by Russian president Vladimir Putin's son-in-law to the shipping group of the US commerce secretary Wilbur Ross.
The leak shows how social media giants Twitter and Facebook received millions in investments that can be traced back to Russian state financial institutions along with aggressive tax avoidance by multinational corporations, including Nike and Apple.
It also includes information about a tax-avoiding Cayman Islands trust managed by the Canadian prime minister Justin Trudeau's chief wealth manager.
The leak also includes how some of the biggest names in the film and TV industries protect their wealth with an array of offshore schemes and the complex offshore webs used by two Russian billionaires to buy stakes in Arsenal and Everton football clubs.
Appleby is the firm in the centre of the storm kicked up by the revelation of these documents. It claims to be one of the top offshore law firms, just like Mossack Fonseca — the firm named in Panama Paper leaks.
According to the company website, the firm has about 470 staff. These include 60 partners. However, there are only 10 offices globally and the locations include Bermuda, the British Virgin Islands, the Cayman Islands, Guernsey, the Isle of Man, Jersey, Mauritius, the Seychelles, Hong Kong and Shanghai.
It is interesting to note that the company has many clients in India though it has no offices in the country.
In fact, it is an Indian company, Sun Group, founded by Nand Lal Khemka, that figures as Appleby's second-largest client internationally, with as many as 118 different offshore entities.
According to The Indian Express, the company in the garb of a law firm, helps the rich and wealthy to avoid taxes, hide names and even supply directors for shell companies.
The Indian connection
With 714 Indians reportedly in the tally, including the likes of Bollywood superstar Amitabh Bachchan, Minister of State for Civil Aviation Jayant Sinha and corporates such as Vijay Mallya who is already under the scanner for non-payment of loans and duping banks. The list also included several firms already under the scrutiny of investigating agencies like the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED).
These include firms in the Sun-TV-Aircel-Maxis case; Essar-Loop 2G case; SNS-Lavalin in which Kerala chief minister Pinarayi Vijayan was named and then cleared; the Rajasthan ambulance scam which has recently been routed to the CBI and which names a company called Ziquista Healthcare (Sachin Pilot and Karti Chidambaram were early honorary/independent directors of the firms respectively); and fresh financial links in a CBI case against YSR Congress chief YS Jagan Mohan Reddy, The Indian Express said.
Minister of State for Civil Aviation Jayant Sinha's name figures in the record because of his past association with Omidyar Network. So does the name of RK Sinha, BJP Rajya Sabha Member of Parliament, in Malta offshore companies' list.
Besides corporates, the data revealed details of individuals as well: Amitabh Bachchan's shareholding in a Bermuda company acquired before the 2004 Liberalised Remittance Scheme kicked in; corporate lobbyist Niira Radia and film star Sanjay Dutt's wife who figures under her former name Dilnashin.
Monday's reports were just the revelations made public after combing through the first lot of the voluminous records, which the newspaper said will be made public in over 40 investigative reports.
BJP's RK Sinha on 'maun vrat', Jayant Sinha says 'Quit offshore firms before joining govt'
BJP Rajya Sabha MP RK Sinha refused to speak because he was on "maun vrat" (silence of vow) for a week for religious reasons.
Sinha wrote on a piece of paper that he he had taken a pledge not to speak for a week for 'Bhagwat Yagna'. Sinha, a former journalist who founded the private security service firm SIS or Security and Intelligence Services, is heading a group that has two offshore entities in Malta offshore.
Meanwhile, Jayant defended himself in a series of tweets, even as the Congress claimed that the non-disclosure of foreign assets amounted to an electoral offence and demanded his resignation over 'conflict of interest' charges.
Jayant said all transactions related to him which have been mentioned in The Indian Express investigation were "fully disclosed" to relevant authorities and were done in his "official capacity, not personal".
Asked about Sachin Pilot and son of former minister Vayalar Ravi figuring up in the Paradise Papers related to the Rajasthan ambulance scam, Congress spokesperson Randeep Surjewala said: "The CBI and ED probe has already been initiated against Sachin Pilot. Will the government order probe against all those in the list?"
"The Congress is open for all sorts of probes... but will Modi choose Compromised Bureau of Investigation or Enemy Directorate probes over a SC investigation," the Congress added. The comment was apparently a dig at central investigation agencies, which the Opposition often claim are nothing more than the Centre's "caged parrot' which is used to systematically target and stifle the Opposition.
How will India probe it?
The multi-agency group (MAG) set up in April last year to probe the Panama Papers leak will also investigate and take "swift action" on the Paradise Papers, the Central Board of Direct Taxes (CBDT) said.
It said the government has directed that investigation in cases of Paradise Papers will be monitored by a re-constituted MAG, headed by the Chairman CBDT and having representatives from the CBDT, the Enforcement Directorate, the Reserve Bank of India and the Financial Intelligence Unit (FIU). The panel will first go through the details of income tax returns filed by the 714 Indian individuals and entities reportedly named in the Paradise Papers and subsequently take action, on a case-to-case basis, official sources added.
Meanwhile, market regulator SEBI will look into alleged fund diversion and corporate governance lapses at various listed firms and their promoters named in the leaked documents. To start with, the stock exchanges and the regulator would ask the listed companies concerned to provide details about any offshore entities like them, which would be then matched with the statutory and regulatory disclosures made by those companies including in annual reports and other filings.
SEBI will also coordinate with other regulators and government agencies, while information would be sought from foreign regulators if required.
With inputs from agencies
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Updated Date: Nov 08, 2017 17:30:28 IST