Key financial data leaked from two offshore firms has revealed how they help the global rich and powerful move their money abroad. The data features names of hundreds of Indians, stirring a fresh debate on tax fraud.
The Paradise Papers, a cache of 13.4 million documents obtained by German newspaper Süddeutsche Zeitung and investigated by the International Consortium of Investigative Journalists (ICIJ), reveals how two firms – Bermuda's Appleby and Singapore's Asiaciti Trust - help the global rich and powerful avoid taxes using artificial entities.
In India's case, The Indian Express newspaper investigated the records for over 10 months to come up with the findings for the South Asian nation. The daily says it will publish in the coming days a series of over 40 reports detailing the results of its investigation.
Among the 180 countries represented in the Paradise Papers data, India ranks 19th in terms of the number of names, with 714 Indians seeing their names appear in the list. The mention of names on the list does not mean that such entities have indulged in stash funds or have generated black money without paying due taxes.
Read more: Paradise Papers — what you need to know
An Indian company, Sun Group, founded by corporate honcho Nand Lal Khemka figures as Appleby's second-largest client internationally, with as many as 118 different offshore entities.
Appleby's Indian clients also include several companies and businesspeople that are being investigated by Indian authorities. It is not just corporates, however, who may have some difficult explaining to do as to their involvement with these shell companies and offshore financial centers.
The appearance of names of politicians and their relatives, of both ruling and opposition parties, has once again turned attention to the issue of tax fraud in Asia's third-biggest economy. The revelation came two days ahead of the "Anti-Black Money Day," which the Indian government led by Prime Minister Narendra Modi is celebrating on November 8, marking the first anniversary of its demonetization decision.
In the Paradise Papers, Minister of State for Civil Aviation Jayant Sinha's name figured prominently due to his past association with the Omidyar Network.
Records of offshore firms linked to the ruling Bharatiya Janata Party's member of parliament and founder of Security and Intelligence Services (SIS), R K Sinha, also appear in Malta list.
The papers also reveal names of people associated with the opposition Congress party, like sons of former union ministers Vayalar Ravi and Veerappa Moily, Ravi Krishna and Harsha Moily respectively.
In reply to a question on the sons of former Congress union ministers figuring in the global index, Congress national spokesperson Randeep Surjewala said the party was ready to face any probe.
The opposition party also mounted a fierce attack on PM Modi's government and demanded the resignation of Minister of State for Civil Aviation Jayant Sinha.
"The Paradise Papers raise serious conflict of interest questions against Sinha. The government should order a probe and register a First Information Report against him," said Surjewala.
Before he was elected to parliament from Hazaribagh in the northern state of Jharkhand in 2014 and became a minister, Sinha had been managing director of Omidyar Network, an investment firm, in India.
Omidyar Network has invested in the US firm D.Light Design that has a subsidiary in the Cayman Islands.
Appleby records show that Sinha served as director of D.Light Design, a detail he did not mention in his declaration to India's Election Commission. He also did not inform about it to the Lok Sabha (the lower house of parliament) Secretariat or the Prime Minister's Office.
However, Sinha said, "On joining the Union Council of Ministers, I immediately resigned from the D.Light Board and severed my involvement with the company. It is crucial to note that these transactions were done for D.Light as an Omidyar representative, and not for any personal purpose."
A complete investigation needed
Appleby's documents also showed how millions of dollars worth of loans were diverted using four offshore subsidiaries of United Spirits Limited India, a firm then owned by beer and airline tycoon Vijay Mallya, who fled India to the UK to avoid paying nearly $1 billion (0.86 billion euros) in loans that he owed to banks.
The leaked data also named celebrities such as renowned film actor Amitabh Bachchan and movie star Sanjay Dutt's wife, Manyata Dutt, who allegedly held several positions in a Bahamas-registered firm and corporate lobbyist Niira Radia.
Experts say the presence of any Indian entity in an offshore tax-friendly jurisdiction need not necessarily amount to violation of laws, but non-disclosure about such entities and routing of funds to them could be ascertained only after a complete investigation.
"It is too early to assume illegality now. But what this investigation shows is the resourcefulness shown by Indian firms to use offshore havens to route money and carry out transactions," a top investigator with the Directorate of Enforcement, a specialized financial investigation agency, told DW, on condition of anonymity.
Read more: Offshore: The legal and the not so legal