The Panama Papers are an unprecedented leak of 11.5m files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca located at Panama. The records were obtained from an anonymous source by the German newspaper Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists (ICIJ). The ICIJ then shared them with a large network of international partners, including the Guardian and the BBC.
About ICIJ [The International Consortium of Investigative Journalists]:
The International Consortium of Investigative Journalists [ICIJ], together with the German newspaper Suddeutsche Zeitung and more than 100 other media partners, spent a year sifting through 11.5 million leaked files to expose the offshore holdings of world political leaders, links to global scandals, and details of the hidden financial dealings of fraudsters, drug traffickers, billionaires, celebrities, sports stars and more.
The trove of documents is likely the biggest leak of inside information in history. It includes nearly 40 years of data from a little-known but powerful law firm based in Panama. ICIJ’s analysis of the leaked records revealed information on more than 214,000 offshore companies connected to people in more than 200 countries and territories. https://panamapapers.icij.org/about.html
Journalist involved in Panama Papers leaks:
As said earlier, Panama Papers are the biggest leak of history, along with ICIJ 370 reporters worked towards the goal of revealing the data.
The searchable database that ICIJ published allows users to explore the networks of companies and people that used – and sometimes abused – the secrecy of offshore locales with the help of Mossack Fonseca and other intermediaries. The leaked data covers nearly 40 years, from 1977 through the end of 2015.
The data, which includes postal addresses, displays links to more than 200 countries and territories, from China to Chile. Users can filter the information by country and by offshore jurisdiction. They can also explore the role of banks, law firms and other gatekeepers of the financial system in facilitating the creation of offshore companies for high net worth individuals. For the first time, they can see details about shadowy Panamanian private foundations, including when available information about who controls them.
More than 370 reporters in nearly 80 countries probed the files for a year. Their investigations uncovered the secret offshore holdings of 12 world leaders, more than 128 other politicians and scores of fraudsters, drug traffickers and other criminals whose companies had been blacklisted in the US and elsewhere.
On April 2–2016 Germany’s Suddeutsche Zeitung published alleged documents from the Panamanian Mossack Fonseca Company in which the newspaper confirms ties to a number of world leaders and their circles to off-shore schemes.
The German publication specifically notes Chinese President Xi Jinping, Ukrainian President Petro Poroshenko, Azeri President Ilham Aliev, Moroccan King Mohammed VI, Saudi King Alman ibn Abdul-Aziz al Saud, the late father of British Prime Minister David Cameron, and a number of individuals allegedly close to Russian President Vladimir Putin.
Robert Palmer, campaign leader at Global Witness said that,
“This investigation shows how secretly owned companies, many of them based in the UK’s tax havens, can act as getaway cars for terrorists, dictators, money launderers and tax evaders all over the world. The time has clearly come to take away the keys, by requiring the collection and publication of information on who really owns and controls these companies. This would make it much harder to launder dirty money and leave the rest of us safer as a result,”
About Mossack Fonseca
It is a Panama-based fourth largest off shore law firm who provides the services like incorporating companies in offshore jurisdictions such as the British Virgin Islands for which they charge a yearly fee. It has offices in more than 35 locations around the globe, and is one of the world’s top creators of shell companies, corporate structures that can be used to hide ownership of assets. They are also into wealth management and it has its branches in Hong Kong, Miami, Zurich and other places around the globe.
What the Panama papers have exposed?
It has exposed how the rich around the world have exploited the offshore tax regimes in numerous times by the way of bribery, arms deals, tax evasion, financial fraud and drug trafficking. They have revealed the head of states and celebrities from all our over the world have used the tax havens.
These are among the findings of a yearlong investigation by the International Consortium of Investigative Journalists, German newspaper Süddeutsche Zeitung and more than 100 other news organizations.
The leaks contains data as old as 40 years starting from 1977 till the end of 2015, it contains a data which provides us a decade by decade and day to day information, it has witnessed how the black money flows in to the offshore markets and how these funds are propagating crime which is increasing day by day.
Among the national leaders, Russian President Vladimir Putin and his associates are leading with a $2Billion trail. Other leaders who hold the wealth in tax havens are Nawaz Sharif, Pakistan’s Prime Minister; Ayad Allawi, ex-interim prime minister and former vice-president of Iraq; Alaa Mubarak, son of Egypt’s former president ; and the prime minister of Iceland, Sigmundur David Gunnlaugsson.
The family of China’s top leader Xi Jinping who took vows to fight against corruption, has been linked to the offshore companies in the leak files. Also in the list are the Ukrainian President Petro Poroshenko, who claimed to be a reformer in a country.
Also, we have the late father of Prime Minister of Britain David Cameron involved in these activities. An offshore investment fund was run by him to avoid paying tax in Britain by hiring a small army of Bahamas residents to sign its paper work. But it is to be noted that since its inception the fund has been registered with HM revenue and Customs and has filed detailed tax returns every year.
It is not only the national leaders; we even have sportsman and top celebrities too involved in panama papers. The best soccer player, Lionel Messi is featured in the document. It reveals Messi and his father owned companies under name of Mega Star Enterprises Inc. have accounts in Tax Havens.
In Iceland, the leaked files show how Prime Minister Sigmundur David Gunnlaugsson and his wife secretly owned an offshore firm that held millions of dollars in Icelandic bank bonds during that country’s financial crisis.
The 10 banks that requested the most offshore companies for clients
Reaction on Panama Papers:
Moscow believes that so-called Panama papers on shell firms were stolen from the Panamanian company and that offshore companies in general are not illegal, the presidential spokesman said Tuesday.
“I would not link the push against offshores to the Panama papers. They are totally different things. ‘De-offshorization’ exists in the Russian economy, but no one has banned offshore companies. There is nothing inherently illegal in offshore companies, and this is an important point to remember. It is only illegal when it is an attempt to evade taxes…”
Outraged citizens took to the streets in Reykjavik, Malta and London while the hashtag #panamapapers trended on Twitter for days after the story broke on April 3-2016. The prime minister of Iceland resigned over the British Virgin Islands Company he co-owned with his wife, while other world leaders scrambled to explain their secret holdings. It took UK’s Prime Minister David Cameron three days to publicly acknowledge he had profited from an investment fund, created by his father that was incorporated in Panama and managed in the Bahamas. In Spain a minister resigned after being caught in a series of lies about his connections to offshore, and in Uruguay police arrested five individuals suspected of laundering money for a powerful Mexican drug cartel.
Media commentators and political leaders feel that Panama Papers underscore the fundamental injustices and inequalities created by the offshore system,
“When taxes are evaded, when state assets are taken and put into these havens, all of these things can have a tremendous negative effect on our mission to end poverty and boost prosperity,” Jim Yong Kim, the president of the World Bank, said as he opened the spring meetings of the World Bank and IMF in Washington soon after ICIJ and more than 100 other news organizations began revealing the results of the media collaboration’s investigation.
President Barack Obama, meanwhile, pointed out that the biggest problem was that many of the schemes revealed by the Panama Papers were legal. “It’s not that they’re breaking the laws, it’s that the laws are so poorly designed,” he said.
The revelations reignited the debate about the need for public registries in which information about who ultimately controls a company be accessible to all. The UK has made disclosure of beneficial owner data mandatory and public, but British overseas territories such the British Virgin Islands and the Cayman Islands, some of the busiest offshore havens, have agreed to share that information only when it is requested by law enforcement.
Citing the Panama Papers, the US government also announced that it has sent legislation to Congress to create a centralized federal registry of the actual owners of any newly created company. The registry would help law enforcement authorities ferret out the real people behind anonymous companies used in money laundering and other wrongdoing.
The anonymous leaker of the Panama Papers, known only as “John Doe,” spoke publicly for the first time in a written statement and called out for concrete steps to combat tax havens. “In the European Union, every member state’s corporate register should be freely accessible, with detailed data plainly available on ultimate beneficial owners,” the source wrote. Doe added that the US “can clearly no longer trust its fifty states to make sound decisions about their own corporate data.”
The United States Treasury Department announced that it’s finalizing new rules to fight the use of shell companies to evade taxes, according to Treasury Secretary Jack Lew.
“In addition, we are about to propose a regulation that would require the beneficial owners of single-member limited liability companies to identify themselves to the Internal Revenue Service, thus closing a loophole that some have been able to exploit,” Lew said.
The chairman of the Scottish Land and Estates (SLE), the organization that represents private landowners, told Sputnik on Friday that it welcomed the intention of the ruling Scottish National Party (SNP) to introduce more transparency in the land ownership following the so-called Panama Papers leak.
Marco Zanni, an Italian member of the European Parliament said that stricter control over the banking system, over financial transactions and over the flows of money could be a serious option to prevent tax avoidance and tax cheats.
Michael Theurer, a German member of the European Parliament, said that the inquiry committee is the right format to deal with the Panama Papers revelations – “the biggest data leak of all times that has made its way in the public and that needs not only judicial but also political consequences.”
The G20 finance ministers and central bank governors discussed about the implications and France, Germany, the United Kingdom, Italy and Spain issued a joint letter, where they called on the G20 to unveil the identity of the shell companies’ owners.
African nations respond to Panama Papers:
In 2010, the Panama law firm Mossack Fonseca sent 409 Christmas cards to customers in Africa, the wealthy individuals, bankers and accountants living in what the law firm called “Target Territory.” Since the release Panama Papers, however, some of those customers have themselves become targets as governments respond with investigations and inquiries into citizens and corporations with links to offshore activity.
In some countries, such as Algeria and Tunisia, politicians issued fiery denunciations or offered conspiracy theories. In others, like the Democratic Republic of Congo, ministers warned journalists to be careful. In Tunisia, authorities launched three separate inquiries. At the other end of the continent, South Africa’s Finance Ministry instructed its agencies to investigate South Africans linked to Panama Papers.
“It is in the interests of all those hiding their assets to come clean and disclose, and the government offers such persons a way to legitimize their financial affairs before they are caught out,” said the ministry. In Sierra Leone, from where numerous diamond operators set up offshore companies, the Ministry of Mines and Mineral Resources announced in April that it was investigating allegations and would take “appropriate action where necessary.”
Civil society in Nigeria has called on the country’s Senate President, Bukola Saraki, to resign after reports the country’s third most powerful political figure was linked to offshore companies that allegedly held undeclared interests in valuable assets, including homes in London. In Rwanda, the Minister of Finance issued a terse statement to confirm a company linked to the country’s former spy chief, Emmanuel Ndahiro, was used to help transport government leaders during periods of conflict.
ICIJ received requests from the Mauritius Revenue Authority and from representatives of the Uganda Revenue Authority to identify citizens or provide documents. ICIJ’s policy is not to share documents with governments.
The Panama Papers – India dimension
Out of the 11.5 Million documents 36000 files were filtered by the team at Indian express—only Indian Newspaper affiliated with ICIJ– and have been able to find 500 Indian names on the firm’s list of offshore companies, foundations and trust. There are also 234 Indian passports details that were handed over as part of the incorporation process which the journalists extracted.
The people in the list are those who have availed the services from the law firm and we have some of the big names featured in the Panama papers from the Indian side as well—like – Amitabh Bachchan, Aisawarya Rai Bachchan, two politicians – Shishir Bajoria and Anurag Kejriwal; K P Singh, promoter of DLF; and the erstwhile don Iqbal Mirchi.
Bollywood super star, Amitabh Bachchan, who has been named in Panama papers was until recently lined up to be the next face of ‘Incredible India’ — the country’s international tourist marketing campaign — but revelations regarding Bachchan’s apparent connections to firms and accounts in offshore tax havens have led officials to reconsider.
Although, the actor has denied any connection with the companies linked to Panama-based law firm Mossack Fonseca, suggesting his name had been “misused”:
“I have paid all my taxes including on monies spent by me overseas, monies that I have remitted overseas have been in compliance with law… after paying Indian taxes.”
Actor-entrepreneur Ajay Devgan, born Vishal Veeru Devgan, bought over the entire shareholding of a British Virgin Islands (BVI) company Marylebone Entertainment Limited in 2013, claiming it was done to acquire and exploit overseas rights of Hindi films.
Mossack Fonseca & Co (BVI) Ltd was the registered agent of Marylebone Entertainment Ltd at the time of incorporation. The original shareholder of the company, registered in the BVI on October 29, 2013, was Hassan N Sayani, an individual based in London. Sayani was issued 1,000 shares on October 31, 2013. Ajay Devgan bought over the entire shareholding from Sayani the same day. When contacted, Ajay Devgan told The Indian Express, “This Company was set up with RBI guidelines for overseas direct investment route. Proper disclosures have been made by my family in the tax returns as required by law.”
Mossack Fonseca documents threw up, there were at least 20 individuals who had set up offshore entities before the RBI announced a new Liberalized Remittance Scheme (LRS) in February 2004.
The LRS then allowed a resident Indian to take $25,000 abroad every year. This could be gifted or donated, spent on medical treatment, used for children education or even invested in buying shares. The limit has since been increased in phases and currently stands at $250,000 a year.
The Indian Companies in Panama Papers:
One of the country’s top wilful defaulters, Zoom Developers (P) Ltd, and its promoter are linked to an offshore trust registered in the British Virgin Islands (BVI), according to an April 2013 investigation by The Indian Express and the International Consortium of Investigative Journalists (ICIJ) on investments by Indians in offshore entities in tax havens.
The company, which owes at least 26 state-owned banks close to Rs 3,002 Crore, and promoter Vijay Choudhary are linked to Gold Harvest Trust, which was set up on August 23, 2006, and is still active, records show.
While Choudhary is named as the intermediary of the trust, Managecorp Limited is named as the trustee.
Records show that the operation of the trust were carried out from the registered office address of Zoom Developers in Andheri, which has since been attached by the consortium of lenders over default of loans.
According to an investigative audit conducted by the lenders, Zoom allegedly diverted loan funds to 350-odd subsidiaries, related parties based in India and abroad, and to purchase jewelry for the wife of its promoter Chaudhary. Several lenders also issued bank guarantees to the company allegedly without due diligence and allowed it to roll over bank guarantees for four years until 2009-10, according to sources familiar with the case. While the value of bank guarantees was Rs 3,000 Crore, the collateral with them was only Rs 150 Crore, they said.
The ED has booked two cases related to money laundering and forex violations, and the Economic Offence Wing of Mumbai Police has registered two cases.
Alembic Pharmaceuticals Ltd promoter Chirayu Amin and his family members — Malika Amin, Pranav Amin, Shaunak Amin and Udit Amin — are listed as beneficiaries of Whitefield Global Investments Ltd, which was incorporated in the British Virgin Islands (BVI) on October 1, 2015, according to records maintained by Panama law firm Mossack Fonseca.
Chirayu Amin is the chairman and managing director of Vadodara-based Alembic Pharmaceuticals, which registered a turnover of Rs 3,148.71 Crore in 2015-16. Pranav Amin and Udit Amin are joint managing directors in the company.
The value of assets to be held on behalf of the company was estimated at more than $ 1 million, and the source of funds was stated as “capital or loan from shareholder”. The BVI Company also wished to open a bank account in London, records show.
When contacted, Chirayu Amin’s office stated in an email: “All our overseas investments are fully compliant with relevant FEMA and RBI regulations and have been duly disclosed to the regulators.”
Amin told The Indian Express that Whitefield did not have any relation with Alembic Pharmaceuticals. “The shareholder Techno Global Trade & Investments, a company incorporated in Ras Al Khaimah, is owned by me and my family. Small investments have been made in the BVI Company through the overseas direct investment (ODI) route. The remittances made are small,” said Amin.
INVESTMENTS made by a mystery company set up in tax haven British Virgin Islands (BVI) are now the subject of scrutiny in two official investigations, in the Aircel Maxis case and the Panama Papers probe.
During the same period, it also invested 2.4 million pounds in a Singapore company which is a subsidiary of Advantage Strategic Consulting Private Limited where Karti Chidambaram held a majority stake before exiting in 2012.
Responding on behalf of Advantage Strategic Consulting Private Limited (India), a spokesperson said in an email: “All our transactions are reflected in our books. We are not aware of any unrelated third parties or transactions amongst them.”
When contacted, Karti Chidambaram said in an email: “I am neither a shareholder nor director of Advantage Strategic Consulting. I am not aware of any transactional details of the said companies.”
On March 7, former Home and Finance Minister P Chidambaram issued a statement on behalf of his family. “Karti runs a legitimate business, apart from managing inherited property. He has been an income tax assesse for many years. He has no undisclosed asset anywhere. If the Government is of the view that Mr. Karti Chidambaram has undisclosed assets, I would ask the Government to make a list of such alleged undisclosed assets. Mr. Karti Chidambaram will voluntarily execute any document necessary to transfer those assets (allegedly undisclosed) to the Government for a nominal consideration of Rupee 1,” it stated.
Besides investing in Advantage (Singapore), Unison (BVI) also invested 1.08 million pounds in three transactions between 2012 and 2014 to pick up 3,30,000 shares at 1 pound each and 7,50,000 shares at 1 pound each in two Jersey companies Clive dale Properties Limited and Four Leaf Limited respectively, according to annual returns filed by the Jersey companies.
Responses of the Indians listed in Panama Papers:
We have already discussed the responses of some of the celebrities, most of them have said that they have invested in offshore entities as per RBI norms or paid the taxes for the investment abroad.
The below are the responses of few people listed on Panama papers, the replies are denying them to be part of the list, none of them have accepted the fact that they are the ones who are listed or they have denied to Indian Citizen or they have just simply not received the calls and said they are busy or on business tour, some people just bluntly told they are not aware any company set up by them.
HSBC India Chief Executive Officer Stuart Paterson Milne held shares in two Panamanian entities, Walton Investments SA and Robaco Incorporated.
Robaco Incorporated had issued two ‘Bearer’ share certificates on May 27, 1983, each representing 5,000 shares. The face value of each share was $ 1.
Walton Investments too had issued two share certificates on October 8, 1985, each representing 5,000 shares. The shares of Walton also carried a face value of $ 1 each. All the shares of both the entities was transferred to Stuart Milne on December 4, 2014, who further transferred them the very next day — December 5, 2014 — to Fortress International Services Limited as trustees of the Robscot Family Trust.
When contacted, Stuart Milne told The Indian Express, “These companies were established some years ago by my late father. All of my tax affairs are declared in full to the Indian tax authorities in line with their requirements.”
Shankar Darbari & Raja Darbari
Offshore entity: Dunia Resources Corp
MF records show that Shankar Darbari and his son Raja, with a listed address in New Delhi’s Greater Kailash, were shareholders in Dunia Resources Corp, which was registered in 2010. Family members said Shankar Darbari, who holds 25,500 shares in Dunia, is engaged in the agriculture sector in Peru and that Raja Darbari, who holds 24,500 shares, lives in the Netherlands.
Records show that details of due diligence for the entity are marked as “restricted” and that MF (Peru) was the “client”. Records also contain data on Shankar Darbari incorporating another offshore company in the BVI, Dunia Treasures Corp, via MF (Peru) in 2010.
RESPONSE: Raja Darbari stated in an email: “Dunia Resources Corp (DRC), since inception and till date, has been a dormant company. It has never had any business activities of any nature whatsoever and it does not even have a bank account anywhere in the world. I am a Dutch national by birth and an EU citizen. I do not live in India.
Offshore entity: Vivanta Holding Inc., Pythhos Technology Holding Inc.
A chartered accountant and analytic expert living in Delhi, Devesh Bahl is named as director in Vivanta Holding Inc. and Pythhos Technology Holding Inc., set up in 2010 and 2011, respectively. MF records show his wife Rashmi Bahl as a director in Vivanta Holding and list their residential address in Vasant Vihar, New Delhi.
Bahl is presently Chief Financial Officer (CFO) in the strategy consulting firm, Boston Analytics, and has previously headed the global financial operations at American Express.
RESPONSE: When contacted, Bahl said he was travelling abroad. Subsequently, he did not respond to calls or text messages.
Bimla Devi Beriwala & Shyam Sunder Beriwala
Offshore entity: Seabrown Holdings Group Inc.
MF records show that Bimla Devi and Shyam Sunder Beriwala, residents of Delhi’s Sarvapriya Vihar, held 51,000 ordinary and 4,06,000 preference shares each in Seabrown Holdings Group Inc., a company incorporated on March 5, 2010. The company was struck off on October 31, 2015.
As the sole shareholder, Dorchester also held two shares of Seabrown since its incorporation until one share each was transferred to Bimla Devi and Shyam Sunder Beriwala on July 20, 2010. Seabrown issued another 50,000 ordinary shares each to the Beriwalas on February 25, 2011. The same day, they were also issued 4,06,000 preference shares each. The share registers of all three companies were maintained in Cyprus.
RESPONSE: “Seabrown has made some investments on which investment income is earned. Newsham Development Inc. is not presently owned by Seabrown. Masic Trading Ltd owns a one bedroom flat in London. The incorporation process of Seabrown was facilitated by Dorchester International Inc. The remittance was made from India under the applicable laws through the approved bank as per RBI Rules. All compliances were followed. The investments are reflected in personal financial statements and also in the income-tax returns filed in India and reported to income-tax authorities,” stated the Beriwalas in an email.
Offshore entity: Kampala Services Ltd
Shashank Singh, a partner who heads the India office of Apax Partners, a global private equity firm, was issued one share in Kampala Services Ltd on February 26, 2007, MF records show.
Singh remained a shareholder until June 16, 2008, when the share was transferred to Volaw Corporate Trustee Ltd, a service provider in Channel Islands. Singh joined Apax in London in 2004, and the company’s website states that he is a board member in Shriram City Union Finance and Zensar Technologies. Singh completed his graduation in Delhi, Masters in Arts (Economics) from Cambridge University and MBA from Harvard Business School.
RESPONSE: “Your queries relate to one share from a historical arrangement in 2007 related to an overseas entity, when I was not resident in India as I was living and working outside the country. The entity was liquidated some years ago. I moved back to India a few years ago and I am tax resident here. All of my investments, assets and income from overseas and Indian sources are declared on my income-tax returns in India and I pay full tax on these,” said Singh.
Offshore entity: Dalton Solutions Ltd
Location: British Virgin Islands (BVI)
Records maintained by Panama law firm Mossack Fonseca (MF) show Sanjay Bhaskar as the beneficial owner and director of Dalton Solutions Ltd, which was set up in 2005. The company was initially under the administration of Morgan and Morgan, and later transferred to MF. Sanjay Bhaskar is shown to have held 1,000 shares of the company between 2006-2009.
Records and registers of Dalton have been deposited in the Isle of Man, with companies in the BVI and Belize listed as the other directors. Bhaskar’s listed address is in Ishwar Nagar, New Delhi, but he now resides in Magnolia Apartments in Gurgaon.
RESPONSE: “I never purchased or invested a single paisa in Dalton. Any and all my assets are held in India and neither my wife, my children nor I are direct or indirect beneficiaries in Dalton, nor have they been at any point of time. If there are any documents that state to the contrary and if asked by the authorities, I will cooperate 100 per cent and sign whatever is needed for further investigations to take place. My wife, children or I have not invested in offshore assets, and any and all income from abroad have been duly declared to tax authorities in India. I have been taxed in India at the full rate.”
Offshore entity: Happy Trading International Co Ltd
MF records show that Prakash Parakh, resident of Kolkata’s Hazra Road, was the sole shareholder of Happy Trading International Co Ltd since June 17, 2013 when the company was set up in Seychelles. He was also appointed the first director of the company on the same day. Happy Trading International Co Ltd (Seychelles) was struck off on December 31, 2014.
RESPONSE: “This is the first time I am hearing about such a company. I am a simple businessman from Kolkata and I have nothing to do with this company,” said Prakash Parakh over phone before hanging up abruptly. He did not respond to subsequent text messages
Offshore entity: Astonfield Management Ltd
MF records show that Mili Sen, resident of Hooghly in West Bengal, held 50 shares of Astonfield Management Ltd between August 2, 2007 and April 4, 2008. The company was incorporated on January 3, 2006. Lalchand Devesh Shah, with an address in Kenya, held 100 shares since January 24, 2006 and transferred 50 of those to Sen in 2007.
Since April 4, 2008, Ramdev Investments Ltd and Shalogram Investments Ltd (both at PO Box 487, Grand Kayman, KY1-1106) hold 50 shares each of Astonfield Management Ltd (BVI). At Sen’s Hooghly address listed in MF records, a caretaker said that the house remained locked for most of the year and he was paid through a security agency. Sen’s nephew Tamal Sengupta, who lives in the neighbourhood, said she died in November 2013.
RESPONSE: “She was a housewife while her husband G M Sen was a renowned physician of the area. Their son Saurabh Sen is settled in New York and had a company dealing with solar lights called Astonfield Management Ltd. But I have no knowledge of whether she had any shares in it,” said Tamal Sengupta, the nephew of Mili Sen.
Savita Rajesh Agarwal & Rajesh Shivratan Agarwal
Offshore entity: EGIC Company
MF records show that the Agarwals, residents of Kolkata, held one share each in EGIC Company since it was set up on October 26, 2006. The couple was also appointed the first directors of the company. The company was struck off on April 30, 2008.
Rajesh runs a chartered accountancy firm in Chandni Chowk, Kolkata. He was not available at his Kolkata address — a modest one-room flat — when The Indian Express visited.
RESPONSE: “I was in Muscat when I set up EGIC Company (BVI) Limited. My wife Savita Rajesh Agarwal was a partner. We wanted to shift to India and earn some money. But in 2007, when we returned to India, we realized that running the company was costing us a considerable amount of money. So we struck it off soon after,” said Rajesh Agarwal over the phone, adding that he worked with a company called Oman Textiles in Muscat.
Offshore entity: Luxury Grove Management Ltd
MF records show that Rithika Gupta, resident of Ali Asker Road in Bengaluru, is the sole shareholder of Luxury Grove Management Ltd since its incorporation on May 12, 2014. She was also appointed the first director of the company.
When contacted on a telephone number provided by a domestic help at the listed Bengaluru address, Surendra Gupta confirmed that he and wife Madhu resided at the location and said they were the parents of Rithika Gupta.
Gupta said that he and his wife were directors of Vibhu Essential Oils LLP, a Ghaziabad-based perfume company. Gupta said Rithika was involved in the import and export of fragrances and added that he was unaware of the names of his daughter’s companies.
RESPONSE: “The address you are mentioning is not mine. I don’t live in Bengaluru. I don’t know what you are talking about. I have no knowledge of Luxury Grove Management,” said Rithika Gupta, over the phone.
Aravind Umapathy Sokke & Manish Bharat Bhushan Chowdhary
Offshore entity: Sevasys Global Solutions Ltd
MF records show that Sokke and Chowdhary held 5,000 shares each in Sevasys Global Solutions Ltd since the company was set up on June 5, 2014. The status of the company is active.
According to the Registrar of Companies, Sokke runs a number of Indian firms in the agro and healthcare sector. He was also a director of Saginaw Ventures Ltd, a UK company dissolved in August 2015.
Chowdhary resides at the Bengaluru address listed in MF records, while Sokke said over the phone that he lives in Davangere.
RESPONSE: “Sevasys Global Solutions Ltd was a call-centre business meant for providing BPO services to the Latin American region in the Spanish language at a cost of five to six dollars an hour. It was set up in BVI to enable payment of wages by the clients. We got some money from a client, about $21,000, but we were unable to find enough Spanish-speaking people in India to start the service. So we shut it down. It was a transparent set-up,” said Chowdhary, adding that he was no longer in touch with Sokke. “I don’t know about Sevasys. I do not own any such company,” said Sokke, over the phone.
Arti Puneet Kapur & Puneet Prem Kapur
Offshore entity: Ripondale Equities Ltd
MF records show that Puneet Prem Kapur and Arti Puneet Kapur, with their listed address in Mumbai, were appointed as directors of Ripondale Equities Ltd on March 30, 2004.
They subscribed to the Memorandum and Articles of Association of the BVI Company, and were issued one share each with a par value of $1. The authorized share capital of the company is $50,000, with 50,000 shares of $1 each.
In a meeting of the directors on May 14, 2004, it was resolved to issue a Power of Attorney (PoA) to Puneet Kapur. It was also decided to grant Kapur powers to open a branch in any Free Trade Zone and/or set up an LLC and/or a wholly owned subsidiary in the Dubai Multi Commodities Centre (DMCC) or any other Free Trade Zone in Dubai — with Ripondale holding as 49 per cent or more shares as per rules in the emirate.
Kapur was also authorized to open bank accounts in the company’s legal name or trading names, or branch/ subsidiary in the UAE, records show. On the same day, a power of attorney was granted to Kapur.
RESPONSE: A caretaker who accepts mail for the Kapurs at their listed Mumbai address said that both were based in Dubai. The caretaker refused to provide contact details or accept a questionnaire from The Indian Express to be handed over to them.
The Indian Government action plan
Amid a raging debate in the Indian media and political mud-slinging over the Panama Papers, a Reserve Bank of India’s report has pointed out that not all transactions highlighted in the Papers are illegal.
Citing RBI’s report on remittances, Indian Industries’ apex body, ASSOCHAM (Associate Chambers of Commerce and Industry) partially dismissed the revelations made in the Panama Papers. ASSOCHAM Secretary General Mr D. S. Rawat said, “Instead of seeing all the remittances abroad with a needle of suspicion in the context of the so-called Panama Papers, we must realize a fair amount of liberal foreign exchange regime is in operation and which is how it should be.
Let Panama Papers noise not drown out legal overseas transactions.” The reports pointed out that in 2014-15 alone, as much as $1.32 billion was remitted out of India legally under the Liberalised Remittance Scheme (LRS). As per the LRS an Indian resident is free to remit money abroad for a list of activities within a set limit. India’s Minister of State for Finance, Jayant Sinha while talking to Sputnik said,
“A multi-agency group has started its investigations into the Panama Papers revelations. Other investigation reports like that of HSBC and lists handed over by foreign tax authorities will also be considered in order to differentiate the legal from the illegal.” The ASSOCHAM published a list of activities falling under the LRS. The activities include “gifts, studies abroad, maintenance of close relatives and investment in equity/debt.” US dollars © AP Photo/ Vahid Salemi ‘Redirecting Money’: Why US Could Be ‘Behind #PanamaPapers Leak’
The LRS also allows individuals to acquire immovable property abroad to the tune of $2,500,000 per year, without prior approval. Besides, resident individuals can set up joint ventures (JV) and wholly owned subsidiaries (WOS) outside India for legitimate business activities within the overall limit of $2,500,000. It also allows purchase of expensive art.
A resident individual can also invest in mutual funds, venture capital funds, unrated debt securities, promissory notes etc. Furthermore, the resident can invest in such securities out of the bank account opened abroad under the scheme. RBI data accessed by ASSOCHAM revealed that $1.32 billion was legally remitted out of India for these reasons. The Panama Papers has named around 500 Indians, including celebrities and industrialists who have invested huge amounts of money in to offshore entities in Panama, considered a tax haven.
A multi-agency group investigating the credibility of the accusations made in the Panama papers comprises of officials from the Reserve Bank of India, Information Technology department, Financial Intelligence Unit, Enforcement Directorate and Foreign Tax and Tax Research department.
The Foreign Tax and Tax Research (FTTR) division of the Ministry of Finance has sent 91 references to 12 countries, seeking financial and investment details of individuals named in the Panama Papers. These references have been sent over the last three months and more are in the process of being dispatched. The Multi-Agency Group, constituted the very day the first list of the Panama Papers was published. The master list was prepared on the basis of names published in The Indian Express and from data released subsequently on the ICIJ website.
Of the 297 individuals, 120 were said to have admitted to Income Tax authorities, wholly or partially, that they had incorporated the offshore entities which figured in the data.
The 12 countries to whom the references have been sent are the British Virgin Islands, Bahamas, United Arab Emirates, Luxembourg, United Kingdom, Gibraltar, Jersey, Singapore, Seychelles, United States, Switzerland and Cyprus
The Prime Minister’s Office (PMO) has been informed about this action and till date four status reports have been submitted to it by the Multi-Agency Group. Officials said that while a fortnightly report was being sent to the PMO, they will now be handing in a monthly report on the progress of the probe into The Panama Papers and follow-up action. The Special Investigation Team (SIT) on black money is also being regularly briefed on the progress.
The Indian clients of Panamanian law firms who were named by Indian Express, have been given detailed questionnaires by the unit of the Income Tax investigative team as per the instructions of Prime Minister, who has asked for the first status report on the investigation in the Panama Papers.
The process has started already and the clients are given time to respond if they are the people who are named in the reports of The Indian Express and want them to comment on the offshore entities listed against their names.
The queries will be:
- If the client had taken permission before incorporating the offshore entity.
- Details of shareholders/directors / owners of the beneficial offshore entity.
- How the money was routed for its incorporation.
- Details of assets
- Details of transactions
- The extent of deposits made in the entity under the liberalized remittance scheme (LRS)
It is also being told by the officials of ministry of finance that there are a lots of people who have made the deposits under the Liberalized Remittance Scheme [LRS] scheme who have also declared the same to the tax authorities. But, there are cases where they have made partial disclosure wherein they have declared about few offshore entities and omitted from mentioning others on the income tax returns.
The set of individuals, who haven’t declared about their offshore entities and asset, will be the first ones to receive the notices from the tax department to give the details of their assets and offshore entities.
Earlier, the court had issued notice to the Centre and others on the PIL seeking CBI inquiry against Indian offshore bank account holders named in the Panama papers
Whether these initiatives will facilitate the end of menace of tax havens versus India is a big question. Also whether India will also go for a registry system which is transparent for all elected representatives at central and state level as well as for others like business tycoons/sports starts etc. These are important issues which we need to tackle on a war footing to minimize black money of India getting accumulated in Tax havens through intermediate legal firms in regimes like Panama.