Almost eighteen months after Panama Papers leak, another massive trove of secret financial data has been leaked by the International Consortium of Investigative Journalists (ICIJ). The financial data on how big corporatess and ultra-rich individuals moved money to and from 19 tax havens to evade taxes was initially obtained by German newspaper Suddeutsche Zeitung.
The leak, called the Paradise Papers, contains 13.4 million documents from two leading firms in offshore finance. Most of the data leak came from Appleby, a Bermuda-based legal services provider, that facilitated setting up of offshore firms with low or zero tax rates. Singapore-based Asiaciti was the other firm that helped wealthy to move money to tax havens.
India ranks 19th out of 180 countries in terms of the number of names in the offshore data leak. A total of 714 Indians have been named, The Indian Express reported. News outlets worldwide partnered International Consortium of Investigative Journalists (ICIJ) to bring out stories on how politicians, multinationals, celebrities and uber-rich individuals use trusts, foundations and shell companies as front to hide their cash from tax authorities.
The leak has revealed names of famous personaliries like Queen Elizabeth II, lead vocalist of U2 band Bono and American singer Madonna. The Paradise Papers put the lid off on how about $13 million of the Queen's private money was invested offshore into funds in the Cayman Islands and Bermuda by the Duchy of Lancaster, which handles investments for her 500 million pounds private estate.
Commenting on the leaks, Appleby said it was "satisfied that there is no evidence of any wrongdoing, either on the part of ourselves or our clients", adding: "We do not tolerate illegal behaviour."
Who are the Indians in the list? And their response
BJP Member of Parliament Ravindra Kishore Sinha, who was named in The Indian Express report for allegedly heading a group which has two offshore companies took a vow of silence when he was questioned by media.
Sinha, who founded the private secuirty firm SIS, expressed an inability to verbally respond to the press when asked about his name in the Paradise Papers leak. BJP MP asks someone for a pen and jots down that he is observing a 7-day vow of silence or 'maun vrat' in Hindi.
According to The Indian Express report, BJP MP Ravindra Kishore Sinha, who founded the private secuirty firm SIS, heads a group which has two offshore companies. SIS Asia Pacific Holdings Ltd (SAPHL) and SIS International Holdings Limited (SIHL) are the two subsidiaries of SIS, the report said.
Sinha, however, issued a press statement earlier in the day stating: "These companies are indirect 100 per cent subsidiaries of Security and Intelligence Services (India) Limited in which I am a shareholder. I have no direct interest in these companies except to the extent of my shareholding in Security and Intelligence Services (India) Limited. As these companies are indirect subsidiaries of Security and Intelligence Services (India) Limited, I am also a director in these entities. Due to the prevailing regulation in these countries, which require any company to have at least two shareholders, I hold 1 share each in these companies for which the beneficial interest has been declared in favour of Security and Intelligence Services (India) Limited and SIS International Holdings Limited, the 100% shareholders of SIS International Holdings Limited and SIS Asia Pacific Holdings Ltd respectively. These matters have been fully disclosed in the various filings with SEBI as a part of the IPO of Security and Intelligence Services (India) Limited."Former corporate lobbyist Niira Radia, whose named emerged in the Radia Tapes was also named in The Indian Express report. Radia, who used her connections with some journalists and politicians to influence cabinet appointment during UPA II, was part of two offshore companies in Malta, The Indian Express reported.
According to The Indian Express, funds amounting to over $1.5 billion were allegedly diverted using four offshore subsidiaries of United Spirits Limited India, when fugitive tycoon Vijay Mallya owned the company. After Diageo group bought USL India from Mallya, it underwent a restructuring process to get rid of these three intermediate subsidiaries and ended up waiving the $1.5-billion debt owed by these subsidiary companies.
The $1.5-billion loan waiver and the novation possibly ended up in Mallya taking away much more than the Rs 1,225 crore that Diageo reported to BSE - the amount actually works out to around Rs 10,000 crore going by Appleby documents, The Indian Express report said.
Markets regulator Sebi to look into offshore leaks
Markets regulator Sebi will look into alleged fund diversion and corporate governance lapses at various listed firms and their promoters, including those linked to Vijay Mallya, named in the leaked 'Paradise Papers'.
While some entities linked to Mallya are already being probed by Sebi and other agencies, any fresh disclosure in the leaked documents made public by ICIJ (International Consortium of Investigative Journalists) would be thoroughly looked into, senior officials said.
The disclosures about other listed firms and those associated with them or their promoters would also be looked into for any irregularities including about corporate governance and disclosure norms, the officials added.
Officials maintained that mere presence of any Indian entity in an offshore tax-friendly jurisdiction may not amount to violation of laws, but non-disclosure about such entities and routing of funds to them could be ascertained only after a thorough investigation.
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, one official said, while adding that a structured multi-regulatory approach could be discussed at FSDC (Financial Stability and Development Council) or other such forums.
According to The Indian Express, when Veerappa Moily was Union Minister in the UPA Government, his son Harsha Moily allegedly floated a firm which received investments from a Mauritius-based firm, Unitus Impact PCC. His company Moksha-Yug Access Private Limited, received funds from MYA Unitus Impact Partners, one of the two cells of Unitus Impact PCC.
Harsha Moily's response
"Having founded MYA and led the company as its CEO since its inception in 2005, I have seen MYA experience growth as well as face significant challenges in operating an impact business in rural India. The dairy/ agri space is extremely volatile, but it is a critical sector for rural India and we worked hard to make our business model work.
MYA has always had a farmer-first approach, and our objective has always been to ensure that our dairy farmers be benchmarked with the best in the world in terms of productivity (quality and quantity of milk per cow) and that economic growth be balanced with human progress. With this primary objective, it was imperative that MYA raise external investment from professional investors in the impact investment space including by Unitus Impact PCC - MYA UIP, the investment vehicle set up by Unitus Impact to make investments into MYA (they led an investment round in 2011). Please also note that we have raised capital from a range of other professional institutional investors such as Unitus Equity Fund and Khosla Impact (both of whom originally invested in 2008) through their investment vehicles, with much of the overall equity investment into MYA having started even before my father became a Union Minister in UPA II."
The Indian Express report also said that Bollywood actor Sanjay Dutt's wife Dilnashin Sanjay Dutt, also known as Manyata, allegedly held several positions in a Bahamas-registered firm Nasjay Company Limited. A spokesperson for Manyata Dutt said: "As per the requirements of provisions of Income-tax Act, 1961, all the properties, company or body corporate or shares in any company are declared in the balance sheet."
Minister of State for Civil Aviation Jayant Sinha
The Indian Express report alleged that records of offshore legal firm Appleby show MoS Civil Aviation Jayant Sinha served as Director of D.Light Design. The report alleged that Sinha did not mention this in his declaration to the Election Commission when he contested the Lok Sabha polls in 2014.
Response from MoS Jayant Sinha
I joined Omidyar Network in September 2009 as Managing Director of their Indian operations. I resigned in December 2013 to pursue a career in public life.
At Omidyar Network, I was responsible for initiating the firm's investment in D.Light Design in 2010. D.Light Design is the world's leading solar power company for off-grid families. Thereafter, I served on the Board of D.Light Design till November 2014. Till December 2013, I was on the Board as Omidyar Network's representative. From January 2014 till November 2014, I served on the Board as an Independent Director. I resigned as a Board Member when I joined the Union Council of Ministers in November 2014. I am not associated with these companies any longer.
I did not receive any compensation as a D.Light Design Board Member while I was at Omidyar Network because I was serving as Omidyar's representative. While serving as an Independent Director from January 2014 to November 2014, I received consulting fees as well as shares in D.Light Design. This has been fully disclosed and accounted for in all my tax filings. In my various disclosures for the elections, the Lok Sabha and the Prime Minister's Office, I have disclosed all my aggregate share holdings.
During the years that I was at Omidyar Network, the firm made a variety of investments including D.Light Design. As a member of the firm during those years, I am entitled to a share of the carried interest in these investments. The actual details of the various investments made during that time is confidential information that can only be disclosed by Omidyar Network. As a Board Member, I was required to sign various financial documents.
Appleby also registered a company in tax haven Mauritius which is currently being probed by CBI and ED in the Rajasthan Ambulance scam. One of the founders of the firm is the son of Congress leader and former Union minister Vayalar Ravi, The Indian Express reported
Several prominent politicians who have been named in the complaint, which was first filed by the Rajasthan police in 2014, after the BJP came to power in Rajasthan include former Rajasthan chief minister Ashok Gehlot; Karti Chidambaram, son of former finance minister P Chidambaram; former Union minister Sachin Pilot; and, Ravi Krishna, son of former Union minister Vayalar Ravi.
Karti Chidambaram told The Indian Express: "I was briefly a Non Executive Independent Director with the company and have never been a shareholder. And as far as I know Ziqitza Health Care never had any off shore operations. A company with off shore operations may have invested in them."
Sachin Pilot said that once the company changed its status from a "non-profit" venture to a "for-profit" venture, he resigned from it before he became a Member of Parliament in 2004. Pilot said: "For under a year I was a Honorary Director with the company. This was in 2001. When they informed me that they have become a for profit company I resigned. I have never held a share in it, held a board meeting or signed any papers."