The new Panama Papers leak poses new challenges for BJP govt

By TN Ashok. Dated: 7/7/2018 11:30:42 PM

The Modi government seems to be piling up insurmountable problems in the run up to the 2019 elections in May next year. First the spiralling crude prices, fiscal deficit and current account deficit widening, increased tariffs by the United States on a huge list of Indian product imports, the Karnataka defeat.
And now the new Panama Papers leak. What are the Panama Papers and what's different in the new leaks and how do they pose a challenge to the BJP government to contain in? Let's examine it. The Panama Papers are some 11.5 million leaked documents detailing financial and attorney-client information for more than 214,488 offshore entities. The documents, some dating back to the 1970s, were created by, and taken from, Panamanian law firm and corporate service provider Mossack Fonseca, and were leaked in 2015 by an anonymous source, according to Wikipedia. This is a partial list of people named in the Panama Papers as shareholders, directors and beneficiaries of offshore companies. The International Consortium of Investigative Journalists (ICIJ) released the full list of companies and individuals in the Panama Papers on 10 May 2016. ICIJ published the following disclaimer with regard to the data provided: "There are legitimate uses for offshore companies, foundations and trusts. We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Power Players interactive application have broken the law or otherwise acted improperly." The Indian names mentioned were:
· Anurag Kejriwal, former president of the Lok Satta Party Delhi Branch
· Vijay Mallya, former Member of Parliament of the Rajya Sabha
· Anil Vasudev Salgaocar, former Member of the Goa Legislative Assembly
The documents contain personal financial information about wealthy individuals and public officials that had previously been kept private. While offshore business entities are legal the media has found that some of the Mossack Fonseca shell corporations were used for illegal purposes, including fraud, tax evasion, and evading international sanctions.
"John Doe", the whistle-blower who leaked the documents to German journalist Bastian Obermayer from the newspaper Süddeutsche Zeitung (SZ), remains anonymous, even to the journalists who worked on the investigation. "My life is in danger", he told them.[
In a May 6 statement, John Doe cited income inequality as the reason for his action, and said he leaked the documents "simply because I understood enough about their contents to realise the scale of the injustices they described". He denied any links with any government or intelligence agency and expressed willingness to help prosecutors if granted immunity from prosecution. After SZ verified that the statement did in fact come from the source for the Panama Papers, the International Consortium of Investigative Journalists (ICIJ) posted the full document on its website.
SZ asked the ICIJ for help, journalists from 107 media organizations in 80 countries analysed documents detailing the operations of the law firm. After more than a year of analysis, the first news stories were published on April 3, 2016, along with 150 of the documents themselves. Since Panama objected to the country's name being used as also leading entities doing business in the country, some media outlets covering the story have used the name "Mossack Fonseca papers".
The Panama papers or the Mossack Fonseca papers as infamously called were broken in India by the media house The Indian Express, which carried recently in its reports a new set of Panama Papers linking some 424 Indians to offshore entities in tax havens. Shocked Indian Tax authorities acted swiftly promising "prompt investigations" into revelations and leads from the tranche of 11.2 million documents connected to Panamanian law firm Mossack Fonseca.
Sushil Chandra, Chairman of the Central Board of Direct Taxes (CBDT), heading the joint team probing the Panama Papers, told The Indian Express that within hours of the fresh revelations, "initial verification" of the new names and details had already begun."New documents will also be examined in a reasonable time-frame and initial verification has already started… we are already trying to complete investigations in as many cases of Panama Papers as possible within the current assessment year, and many under the black money Act," he said.
Chandra had said that in a large number of cases of persons named as owners or officers of offshore companies incorporated by Mossack Fonseca, the probe team found that assets owned by these companies, or investments made via them, had not been declared or surrendered during the period of the black money amnesty scheme announced by the NDA government. The CBDT also issued a statement pegging detection of undisclosed foreign investments at Rs 1,140 crore.
"We have taken invasive action in 62 cases connected to Panama Papers and have found that large deposits had been made in foreign bank accounts which had not been declared in tax returns or surrendered during the amnesty scheme. These bank accounts have been traced by us after the publication of the first tranche of the Panama Papers, after the foreign jurisdiction concerned has supplied us with balance sheets and details of the entity, and after we have combined this with our own intelligence from various units," Chandra said.
Underlining that in 16 cases of Panama Papers, criminal prosecutions had already been filed in different courts of the country and notices under Section 10 of the black money Act had been issued in 32 cases, he said this was evidence that the CBDT acted with speed.
"We will continue doing so and the new details and batches of documents will be scrutinised by us similarly," he said.
The 2nd lot of exposures of account holders from the Panama Papers has raised the regulatory heat, prompting the law firm Mossack Fonseca to resign from various offshore firms it helped set up, but one Indian client continued to urge the law firm to stay on, the new records reveal. That client was Moonglow Investments Global Ltd, an offshore entity set up in the British Virgin Islands in 2010, with Dr Jahangir Sorabjee, son of former attorney general Soli Sorabjee and honorary consultant physician at Bombay Hospital, listed as the sole shareholder. On April 4, 2016, when The Indian Express reported on Moonglow during the Panama Papers leak, Sorabjee said he had complied with all disclosure norms as required by Indian tax authorities. But new records show that Moonglow was included in the list of 69 companies sent by BVI's Financial Investigation Agency to Mossack Fonseca on May 3, 2016, seeking more details.
However, on December 1, 2016, six months after the Panama Papers leak, Moonglow was sent a notice by Mossack Fonseca, asking for details of property holdings and bank accounts. On February 2, 2017, the law firm sent its "notice to resign." The new leak includes subsequent emails between compliance staff, which state: "the client does not want you to resign…', "it is important for us to keep this client…', "please review/rescind resignation…"
As part of compliance procedures, Sorabjee provided more information on his holdings through Moonglow. As source of funds, he stated that "property investments" would be the main activity of the company and that its recurring or annual investments would be $30,000.
In the declaration, Sorabjee stated: "Moonglow investments has invested in property in the USA and UK. Funds for the purchase of these were sourced from sales of properties in India and remitted post taxation as per norms set by the Reserve Bank of India. Details of Moonglow Investments, its bank accounts and its holdings have been consistently declared to the Indian income tax authorities as per their requirements…"
Sorabjee also informed the law firm that the estimated net worth of the two properties would be $1.8 million and provided details of two bank accounts maintained by him in Hong Kong.
Sorabjee further told the Indian newspaper, which has a long history of investigative journalism. "I am almost certain I was not served any letter of resignation by Mossack Fonseca in February 2017. I believe a new registered agent was required when the company was shut down earlier this year."Meanwhile, so called financial buccaneers and diamantirine Vijay Mallya and Neerav Modi continued to pose a major challenge to intelligence and investigative agencies. One Vijay Mallya, who stashed away billions in offshore accounts, is now a refugee in London on a British Passport and Neerav Modi seems to have fled India fearing persecution for defrauding the Punjab National Bank of of millions supposedly on a Belgian passport and is cooling heels in Lisbon in Portugal.
Customs and intelligence claimed he could be having a British passport or a Belgian passport of simply an fake Indian passport and fled the country. Absconding billionaire jeweller Nirav Modi is understood to have jumped on a plane and fled to Brussels on Tuesday or Wednesday, immediately after front-page reports in the media that he was in London seeking political asylum and that the Indian high commission was awaiting formal confirmation of his presence from the British government.
The diamond merchant is said to be travelling on allegedly a Singapore passport in and out of the UK freely. On Monday, the CBI had requested Interpol for a red corner notice against Nirav Modi and his brother Nishal, a Belgian national. On Tuesday, a special court in Mumbai had issued a non-bailable warrant against the diamantaire and his family members.
At the end of the day, the BJP government and the twin think tank of PM Modi and BJP President Amit Shah have to contend with the new leak in Panama papers, redeeming the promise of repatriating billions of dollars parked in offshore accounts illegally by wealthy Indians including businessmen and manage the economy on the road to 2019 elections. Entrust finance ministry with the onerous task of containing oil prices, check fiscal deficit and current account deficit and inflation. And home ministry of fighting fissiparious entities threatening national integrity and peace. But home ministry seems to have a good report against terrorist attacks in civilian areas. Only military bases have been attacked where intelligence has failed abysmally.
(T N Ashok is a Corporate Consultant, Resident Editor and Writer of Economic Affairs. Feedback at:



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