The multi-agency group probing the Panama Papers will be reconstituted to monitor a probe and take “swift action” on Paradise Papers which uncover financial holdings abroad that list a number of Indian entities, the Finance Ministry said today. The announcement came hours after the release of the first set of Indian corporates in the ongoing investigation by The Indian Express in collaboration with the International Consortium of Investigative Journalists (ICIJ) and German newspaper Suddeutsche Zeitung.
Paradise Papers are the largest ever leak of corporate data of financial transactions related to offshore firms in secret tax havens.
The publication “was a great development because it shows that (now) nothing remains a secret,” said Finance Minister Arun Jaitley speaking to The Indian Express. “With this, the secrecy of tax havens and transactions done through them have been smashed. The worldwide publication also shows that those who think they are indulging in what they think are undercover financial transactions are highly mistaken. What has happened (the publication of the Paradise Papers) is a very good development for India and this will further encourage cooperation between countries on financial matters at an international level. It is a step towards further Group headed by CBDT with ED, RBI and FIU will probe Paradise Papers transparency and cooperation.”
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His views were echoed by Chairman of Central Board of Direct Taxes (CBDT) Sushil Chandra who will head the Paradise probe team which will have representatives from CBDT, Enforcement Directorate (ED), Reserve Bank of India and Financial Intelligence Unit (FIU).
Chandra told The Indian Express: “The Tax Department has already been put on the job and the tax profile of all the Indians named in the Paradise Papers will now be put under scrutiny. All cases will be put under examination, just as they were in the Panama Papers published last year.”
The CBDT chief added that in some cases where enforcement agencies were already probing financial irregularities, their task would be to see if a wider probe was needed.
“The scope of cases which are already under the remit of agencies like the Central Bureau of Investigation (CBI) and ED which have figured in the Paradise Papers will be widened further. I would like to add that our experience with other such exposes is that replies from foreign offshore jurisdictions are coming in at a faster pace as a result of better international cooperation and also because of the pattern of references we have been sending. This will take that process further and we will try and submit our references to offshore destinations mentioned (in the Paradise Papers) as soon as possible.”
The cache of 13.4 million documents in Paradise Papers tumbled out 18 months after Panama Papers. In India, The Indian Express, just as it did with the Panama Papers, investigated these records for over 10 months to come up with the India findings which are being published in a series of over 40 investigative reports that began last night.
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A bulk of the records investigated are from Bermuda law firm Appleby. This 119-year-old company helps set up offshore companies and manage bank accounts for clients to do one or a combination of the following: avoid or evade taxes; manage real estate assets; open escrow accounts, purchase airplanes and yachts paying low tax rates or, simply, use offshore vehicles to move millions across the globe.
Among the 180 countries represented in the data, India ranks 19th in terms of the number of names. In all, there are 714 Indians in the tally.
Besides Appleby, the leaked documents include files from the smaller, family-owned trust company, Asiaciti (Singapore), and from company registries in 19 secrecy jurisdictions.
The ED has taken cognisance has begun its probe in at least two cases: Ziqitza Health Care Ltd, a company where Congress leader Sachin Pilot and former finance minister P Chidambaram’s son Karti were once directors. The company is under probe by CBI and ED for its alleged involvement in an ambulance scam in Rajasthan.
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The agency has also taken into cognisance financial dealings between Diageo and USL, once owned by Vijay Mallya. In the case of Ziqitza, which was founded by former Union Minister Vayalar Ravi’s son Ravi Krishna, ED sources said some new details have emerged through the Paradise Papers and the same would be investigated.
“Some of the offshore investments which have been mentioned in the Paradise Papers as reported in The Indian Express have been under our radar. We have sent judicial requests abroad to get details, certified documents and evidence related to these investments. We are yet to receive a reply on them. However, some other investments as mentioned in the paper, are completely new. The team probing it has already been given directions to begin a probe,” a senior ED official said.
Pilot, Krishna and Karti have all denied any wrongdoing with both Pilot and Karti saying they were not shareholders of the company and were non-executive directors.
In the case of Mallya, against whom ED is probing a case of Rs 9000 crore of alleged money laundering by way diversion of defaulted bank loans, agency sources said it is looking into how Diageo waived a debt of $1.5 billion to Mallya after takeover of USL, as reported in The Indian Express today.