Panamanian law firm Mossack Fonseca — from where The Panama Papers data leak occurred — has been figuring in confidential reports of the Income-Tax (Investigation) Headquarters in New Delhi since as early as 2007. This is six years before the Department sent its first request for information for details of an offshore entity Mossack Fonseca incorporated in the British Virgin Islands (BVI), and almost nine years before the massive data leak that has resulted in the government announcing a multi-agency probe into The Panama Papers.
Senior officials in the I-T (Investigation) unit told The Sunday Express that the fact that Mossack Fonseca was a popular destination for Indians seeking to set up an offshore shelf company or foundation figured both in internal reports prepared by the Department, as well as in the status reports prepared for submission to the Supreme Court during the same period.
Specifically, Mossack Fonseca was mentioned as the incorporator in the I-T background note as the Department sought permission of Central Board of Direct Taxes (CBDT) bosses to tap the phones of corporate lobbyist Niira Radia in 2008. Several agencies tried to trace payments made into such an offshore account and now, documents gleaned from The Panama Papers have established that as an NRI, Radia had indeed registered an entity — named Crownmart International Group — in the BVI in 1994.
In 2007, when the I-T Department was probing a tax evasion case against the telecom equipment manufacturing company Himachal Futuristic Communications Ltd — which was eventually raided — Mossack Fonseca was identified as the possible facilitator for setting up companies in tax havens.
Top officials recall two other cases in which intelligence was received of offshore Trusts being set up via Mossack Fonseca in tax havens like Nieu and the Bahamas for individuals under the Income-Tax scanner. The investigation in these cases has not, however, concluded, the officials said.
While these were early instances of Mossack Fonseca figuring in confidential Income-Tax reports, it was finally in October 2013 that the Department sent its first formal request for information to the BVI for details of an offshore entity incorporated by them. This was six months after The Indian Express-ICIJ investigation into offshore accounts in the BVI (published on April 4, 2013).
As reported now (The Indian Express, April 5, 2016) as part of The Panama Papers investigation, the data reveals that there were at least five instances on which Indian authorities made official requests to a tax haven for information, all of which were then routed to Mossack Fonseca.
The first offshore entity was Bragmar Equities, registered in the BVI for which a request was made in October 2013. This was followed by requests, all despatched in 2014, for details such as incorporation, and names of directors and shareholders of three other firms also registered by Mossack Fonseca in the BVI: Clair Consultants Ltd, STI United Corporation, and Zerpin Holdings. The most recent request recorded in The Panama Papers was sent by Indian authorities in January 2015 to the Bahamas, which in turn routed the correspondence to Mossack Fonseca, and named an off shore company called Kansu Corporation.