HEADQUARTERED IN Bermuda, Appleby is not a tax adviser but the 119-year-old firm is a leading member of the global network of lawyers, accountants, bankers and other operatives who set up and manage offshore companies and accounts for clients who want to avoid taxes or keep their finances under wraps.
Records investigated by The Indian Express show that while Appleby does not have an office in India, its officials made several business trips to Mumbai, Delhi and other major metros to “build relationships” with Indian intermediaries and to market offshore destinations.
An email talking about one such trip made by Appleby executives says: “Visited Indian intermediaries (law firms, accountants and banks) in Delhi and Mumbai between the 5th and the 11th November 2009 in order to build relationships with the intermediaries and to gain intelligence on the Indian market place.”
A common strand that runs across companies and individuals whose names have emerged in Paradise Papers is their need for Appleby’s range of services: offshore legal, fiduciary and administration services for facilitating tax avoidance to concealing identity of beneficial owners; round-tripping of funds and raising capital across numerous jurisdictions including Bermuda, British Virgin Islands, Cayman Islands, Guernsey, Isle of Man, Mauritius and Seychelles.
Appleby offered not only an existing shell company but also with directors on board and financial transactions through their offices in those jurisdictions, records reveal.
Records show that after a visit to India by three Appleby executives, an internal note flagged that top-tier law firms are involved in international structuring and accountancy firms provide a lot of the consultancy and structuring advice for cross-border work.
EXPLAINED: Why the Paradise Papers matter
So an entry point for Appleby, the note said, would be Indian banks. “The approach to India should concentrate on seeking to develop strong relationships across the law firms dealing with cross-border matters; accountancy firms and Indian banks with overseas operations.”
It added: “Likely growth sectors for the Indian market place include: infrastructure, natural resources, pharma & biotech, IT and some financial services.”
While the note said that inward investment to India will continue to be routed primarily through Mauritius, outward investment is likely to increase with further de-regulation within India, increasing sophistication and with Indian companies that have fared well out of the recession looking to pick up distressed assets/companies.
“Given current tax arrangements it seems likely that these investments will flow through Cypus, Singapore and the Netherlands,” the note said, adding that if Appleby wishes to establish a permanent presence in India this would need a representative office, located in Mumbai, with focus on relationship development and on company formation services for the Mauritius office.
Appleby’s focus on India is not without a reason. Indian clients GMR Holdings Private Limited and GMR Infrastructure Limited are two of its biggest clients in terms of billing. In an internal mail in July 2015, an Appleby official noted that one trust of Essar is the largest single trust that Appleby Trust Cayman Limited has worked with.
While Mauritius has consistently been the largest investor in India, Appleby in 2013 noted that the on-going dispute with India (which continues even in 2017) remains the key risk. “Mauritius and India have been negotiating for six years to come up with a new version of the tax deal but have yet to reach a compromise. The uncertainty has put off investors, with money adopting a wait-and-see attitude,” says the note.
The note pointed that as tensions between Mauritius and India continue, Africa’s economic growth has started to attract more foreign direct investment into the continent, offering Mauritius an opportunity to sidestep India and take its offshore business elsewhere. In fact, Mauritius has already signed 19 tax deals with African countries and it is negotiating another three.
While Appleby has been conducting business across the world and claims to be complying with norms, there have been occasions where it has let its guard down.
In a 44-page presentation on anti-money laundering, in 2011, Appleby compliance director Robert Woods raised concerns over high-risk accounts. He warned that the firm needs to be concerned about an arrangement which results in funds being made available to terrorists. “We have a current case where we are sitting on about 400K that is definitely tainted and it is not easy to deal with,” his note says.
In another case, Woods’ notes indicated, Appleby set up a trust for a client to buy property in London and accepted money on his behalf “without question.” Appleby later learned, the presentation acknowledged, that the trust was owned by a former Pakistani official who had been charged with embezzling public money and had “infiltrated allegedly corrupt funds into our business”.
In India, too, there are instances where one Appleby branch refused to serve the client for lack of due diligence but another branch served the client. In fact, in many instances, Appleby clients subsequently faced criminal charges by investigating agencies in India.