PANAMA IS INDEED A PARADISE, AND IT HURTS
The Curious Case Of Appleby and Asiaciti
Exactly 18 months ago, Indian media giant, Indian Express in collaboration with International Consortium of Investigative Journalism (ICIJ) and 96 other news organizations, after laboriously working day and night for more than 10 months, unveiled the Panama papers that shook the whole of political and corporate lobby worldwide. Today, they came out with another equally explosive, if not more, set of documents they call the Paradise papers on the same lines. Understandably, the politicians around the world have either gone in incognito mode or are in the midst of endless, non-stop meetings with their financial and legal advisers to somehow sail through this storm.
So, what is it about this revealing that has got all of them running around like mice with a burning tail? Let us try and give you a little insight…in layman’s language (because apparently, that’s the only one we know Read on and get ready to be aghast.
FACTS FIRST: Paradise Papers (ironical name, we think), is briefly (not really) a cache of 13.4 million documents somehow obtained by the German newspaper Süddeutsche Zeitung and then thoroughly investigated by the ICIJ along with Indian Express in India. What it reveals for the layman, like you and me is the way two overseas firms, namely Appleby in Bermuda and Asiaciti Trust in Singapore has been helping the rich and powerful around the world to move their money abroad and thus avoid taxation.
The most interesting fact is the stature of the names therein. Let us give you a very sample: Queen Elizabeth of England (OK, you can shut your mouth now, for there’s a lot more to come); Mauricio Macri, President of Argentina; Petro Poroshenko, President of Ukraine; Khalifa bin Zayed Al Nahyan, President of UAE; Malcom Turnbull, PM of Australia; Anurag Kejriwal, former President of Lok Satta Party’s Delhi branch; almost seven bureaucrats and legal heads from Pakistan; almost 714 Indians including KP Singh of DLF, Sameer Gehlaut of IndiaBulls; Vinod Adani of Adani group; Jayant Sinha, current MOS for Civil Aviation; BJP MP Ravindra Kishore Sinha; the UPA politicians linked with the Rajastan ambulance scam; celebrities like Amitabh and Aishwarya Bachchan to Madonna and Emma Watson…the list has them all. Politicans, Entertainment personalities, Sports personalities, Business people, NGOs, and even Organized crime heads like Iqbal Mirchi, the right hand man of India’s most wanted criminal, Dawood Ibrahim, they are all there. Interestingly, GMR Holdings and GMR Infrastructure are two of Appleby’s biggest clients, while their second biggest client internationally is also an Indian company. The honor goes to Nand Lal Khemka led Sun Group with as many as 118 different offshore entities.
It would be worthwhile to know, what exactly is it that all these rich and the famous are being blamed for. In order to do that, however, we must first understand the expertise of the two now-infamous firms, Appleby and Asiaciti Trust. Talking about the former, from where the bulk of the investigated records are from, Appleby is a 119 year old company and a leading member of the global network of lawyers, bankers, accountants, and other financial operatives. What do they do, you ask? Well, their services include helping the client with (a) avoiding or evading taxes in their country, (b) open escrow accounts, (c) use offshore financial vehicles to move billions across the world, or (c) simply invest in yachts, trust funds, and airplanes paying none or low tax rates. To give you a crux, they include, offshore legal advisory and representation, facilitating tax avoidance by concealing identity of the real beneficiary, round-and-round-and-round-tripping of funds, and raising capital across geographical jurisdictions including Bermuda, Cayman Islands, Isle of Man, Mauritius, British Virgin Islands, and Seychelles. The ‘clients’ are/were free to hire them for any one or any combination of the offered services. Simple!
Now, while setting up an overseas unit or a subsidiary of your organization might seem like an obvious way of expansion or global restructuring; it sure raises a legal issue as to how and why firms like Appleby are permitted to exploit loopholes in the law structure, thereby helping their ill-intentioned clients to avoid legal taxes in their country of origin.
According to the Press Trust of India (PTI), the Paradise Papers are set to be probed into by a Multi Agency Group (MAG) comprising of officials from Central Board of Direct Taxes (CBDT), the Enforcement Directorate (ED), RBI, the Financial Intelligence Unit, and the Income Tax department among a few others. We feel it obligatory to mention here that it is the same MAG that has been working on the Panama Papers since it revealing, and has not been able to come up with any sort of conclusion yet. According to reports, the MAG has given a timeline of 24 months. That it coincides with the current government’s end of tenure is purely coincidental and should not be read too much into, of course.
In order to know more about the scam, the investigation, and the reveal, watch this video.