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Paradise Papers: Tax Haven Secrets of World's Ultra-rich and the Indian Connection

The records range from complex 100-page corporate transaction sheets and dollar-by-dollar payment ledgers to simple corporate registries of countries, such as Antigua and Barbuda, that do not publicly list names of company shareholders or directors.

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Updated:November 6, 2017, 12:17 PM IST
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Paradise Papers: Tax Haven Secrets of World's Ultra-rich and the Indian Connection
Paradise Papers, released by the US-based International Consortium of Investigative Journalists (ICIJ), names a total of 714 Indians.
New Delhi: International Consortium of Investigative Journalists (ICIJ) has examined and revealed 13.4 million corporate records primarily from Bermuda-based law firm Appleby and from Singapore-based Asiaciti Trust and corporate registries maintained by governments in 19 secret jurisdictions, also known as tax havens.

The records range from complex 100-page corporate transaction sheets and dollar-by-dollar payment ledgers to simple corporate registries of countries, such as Antigua and Barbuda, that do not publicly list names of company shareholders or directors.

The leaks were obtained from a German newspaper Suddeutche Zeitung and later shared with ICIJ journalists belonging to 95 media partners across the world, including The Indian Express.

In a nutshell, Paradise Papers files reveal holdings of political leaders and other powerful individuals in companies that are set up outside the owner’s country.

WHAT DO THEY REVEAL?

Paradise Papers reveal records of financial transactions of individuals who have stakes in companies outside India or have set up the same in countries that have no or minimal tax rates.

One must know that it is not necessarily wrong to set up offshore companies as India has double-taxation avoidance agreements with several countries with lower tax rates than its own. Companies can use the required certification for legally transacting in those countries.

However, according to the papers, many offshore companies are fake entities engaged in tax evasion/avoidance, manipulation of the market, money laundering, round tripping (taking untaxed money out of the country through inflated invoices and then bringing it back as an investment), parking black money, bribing, etc.

WHAT ARE OFFSHORE COMPANIES?

A company is any legal entity participating in business activities, such as a proprietorship, partnership, or corporation either public or private.

Offshore is a term that means outside one’s own jurisdiction. Generally, offshore companies are incorporated in countries with relatively lower tax rates than the country in contention.

INDIAN CONNECTION WITH THE PAPERS?

Some of the firms named in the report are under the Central Bureau of Investigation (CBI) and the Enforcement Directorate's (ED) scanner for various cases. These include – the Sun-TV-Aircel-Maxis case, Essar-Loop 2G case, SNC-Lavalin Kerala hydroelectric scandal and the Rajasthan ambulance scam.

Many other celebrities, politicians and business tycoons also feature in the list. Bollywood superstar Amitabh Bachchan is reported to have acquired stakes in a Bermuda-based company before the 2004 Liberalised Remittance Scheme came into force. Lobbyist Niira Radia, who was also named in the 2G scam, actor Sanjay Dutt’s wife Manyata are also part of the expose.

Minister of State for Civil Aviation Jayant Sinha's association with the Omidyar Network, which he is said to have ended years ago, has also ensured that his name figures in the list. Another BJP leader and Rajya Sabha MP, RK Sinha, who is also the founder of Security and Intelligence Services, figures in the list.

Absconding liquor baron Vijay Mallya also finds a mention in the list. The papers reveal that after Vijay Mallya he sold his United Spirits Limited India (USL) to the Diageo group in 2013, the latter waived off millions of dollars of loans taken by USL India’s offshore companies.

The report also indicated that there were fresh financial links in a CBI case against YSR Congress Chief YS Jagan Mohan Reddy.

Indian corporates in the Appleby database include GMR Group, Jindal Steel, Apollo Tyres, Havells, Hindujas, Emaar MGF, Videocon, the Hiranandani Group and DS Construction.

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