Paradise Papers

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Paradise Papers: How 714 Indians Hid Wealth In Offshore Tax Haven, India Ranks 19th Among 180 Countries

The Logical Indian Crew

November 6th, 2017

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Courtesy: The Guardian, Money Control, The Indian Express | Image Credits: Lesoir.Be

The world’s biggest businesses, head of states and global figures in politics, entertainment and sports who have hidden their wealth in safe, secretive tax havens are being revealed this week namely Paradise Papers, in a major new investigation into Britain’s offshore empires, said a report by The Guardian.

A leak of 13.4 million files has been leaked which enumerate the details that expose global environments in which tax abuse can survive. It is a mesh of complex and seemingly artificial ways in which the wealthiest corporations can legally protect and hide their ways. The information comes from two offshore providers and the company registries of 19 tax havens, was initially obtained by the German newspaper Suddeutsche Zeitung and was shared by the International Consortium of Investigative Journalists.

The project which goes by the name of Paradise Papers reveals the largest leak of financial data. The two firms, Bermuda’s Appleby and Singapore’s Asiaciti, helped move the money of the rich and powerful, including from India, abroad. This cache tumbled out 18 months after Panama Papers, working partnership with The Guardian and The New York Times.


The Paradise Papers

A bulk of the records investigated are from Bermuda Law Firm, Appleby. This 119-year-old company, although not a tax advisor, is a leading member of the global network of lawyers, bankers and accountants who set up offshore companies and manage bank accounts for clients who set up offshore companies and manage bank accounts for clients. They do one or more of the following functions: manage real estate assets, purchase aeroplanes or yatches paying low rates, open escrow accounts, use offshore vehicles to move millions around or the globe or even avoid or evade taxes.


Shedding light

In a rapidly globalising world, setting up offshore identities for corporate restructuring or expansion might not be illegal in the true sense of the word, but it surely involves exploiting the loopholes in the judiciary system for one’s own benefit. It involves a process of avoiding legitimate tax in their own country. Paradise Papers opens the door for regulatory bodies come up and investigate in order to ascertain the legitimacy of these offshore transactions.

India ranks 19th, in terms of the number of names associated with the Paradise Papers. An Indian company, Sun Group, founded by Nand Lal Khemka, is Appleby’s second largest international client with as many as 118 offshore entities. Other Indian clients of Appleby are several prominent corporates which will gradually come under the scrutiny of Enforcement Directorate and the Central Bureau of Investigation (CBI), says a report by The Indian Express.

Some of these names include firms in the Sun-TV-Aircel-Maxis Case, Essar-Loop 2G case, SNC-Lavalin case (where even Kerala CM Pinarayi Vijayan was named and then cleared) and fresh financial links in a CBI case against YSR Congress Chief YS Jaga Mohan Reddy.

Wanted in India for a debt default and alleged financial irregularities, Vijay Mallya may also be connected to the Paradise Papers, with seemingly more explanations to do, says a report by The Indian Express. Investigations by the Indian express show that after he sold his United Spirits Limited India to the Diageo Group in 2013, the Diageo group approached a London based law firm, Linklaters LLP to undertake a massive restructuring to simplify the complex group structure created by the Mallyas.

One objective of such complex holding structure appears to be have been aimed at a single objective – alleged diverting funds to a tax haven in British Virgin Islands and three subsidiaries in UK, namely: USL Holdings (UK), United Spirits (UK) Ltd and United Spirits (Great Britain) LTD (UK).


Why Paradise Papers matter?

A treasure trove of 13.4 million corporate records, primarily from Appleby and Asiaciti Trust and corporate registries maintained by governments in 19 secrecy jurisdictions are often referred to as “tax paradise”. This is similar to the three major global financial leaks in the past, like the Panama Papers (2016), Swiss leaks (2015) and Offshore Leaks of 2013. But unlike in the previous leaks, the latest information of financial leaks are more about mega corporate firms rather than individual players and how they took advantage and in many cases misused the offshore jurisdictions, said a report by The Indian Express.

The Paradise Papers show some of the offshore footprints of India’s major corporate entities as well as some high-value individuals. It shows the astounding scale of incorporating shell overseas companies to various ends. Internal communication reveals how the majority of companies with offshore residencies were entirely controlled from India.

Changing ownership of offshore companies to actually change the ownership of shares held by them in Indian companies without paying taxes in India turns out to be another common malpractice.


Indians related to the Paradise Papers

This disclosure comes two days before the NDA government plans to celebrate the anniversary of demonetisation as the Anti Black Money Day.

A report by Moneycontrol says Amitabh Bachchan and Jayant Sinha are among the 714 Indian who are linked to tax havens. Indian corporates in Appleby database include Jindal Steel, Apollo Tyres, GMR Group, Havells, Hindujas, Emaar MGF, Videocon, the Hiranandani Group and DS Construction.

Names of prominent political honchos like Ashok Gehlot, Sachin Pilot and Vayalar Ravi have been mentioned in the list. A company registered by Appleby Mauritius had invested in an Indian firm that is at the centre of an investigation by CBI and ED in connection to the Rajasthan Ambulance “Scam”. One of the founders of the firm is the son of Congress and leader and former Union Minister of Overseas Affairs, Vayalar Ravi.

Jayant Sinha, Union Minister of State for Civil Aviation has worked with Omidyar Network as MD, India and Omidyar Network had invested in D.Light Design, a company in the Cayman Islands. BJP MP RK Sinha, founder of Security and Intelligence Services (SiS) is the head of an organisation which has two offshore companies.

Veerappa Moily, a minister in former UPA Govt and his son Harsha Moily floated a firm that received investments from a Mauritius based firm, Unitus Impact PC.

Data has revealed Bollywood actor Amitabh Bachchan’s shareholding in a Bermuda-based company. The actor was also named in connection to Panama papers in 2015. Additionally, Manyata Dutt, the wife of Sanjay Dutt, business dealings have also been shed light upon by the Paradise Papers. The Indian Express reports that her original name is Dilnashin, held a position in a company based out of Bahamas.

Corporate lobbyist Niira Radia, who was the centre of controversy named Radia Tapes was a part of two offshore companies in Malta.


International names

Paradise Papers hits the world’s wealthiest where it hurts the most, as reported by The Guardian. The 13.4 million files expose offshore tax havens of the biggest names. It reveals:

  • Millions of pounds from Queen Elizabeth’s private estates have been hidden in Cayman Islands funds. Some of her money went to a retailer accused of exploiting the poor.
  • Exclusive offshore dealings by Donald Trump’s cabinet members, advisors and donors.
  • Twitter and Facebook received an investment of hundreds of millions of dollars that can be traced to Russian state institutions.
  • Aggressive tax evasion by MNCs like Apple Inc. and Nike
  • The tax-evading Cayman Islands Trust is managed by Canadian Prime Minister Justin Trudeau’s chief financial advisor.  

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