Amitabh Bachchan, Aishwarya Rai Among 500 Indians Identified in Global Investigation on Offshore Dealings

The list also includes DLF's K P Singh, Gautam Adani's elder brother Vinod Adani, Indiabulls promoter Sameer Gehlaut and members of the family who promote Apollo Tyres.

New Delhi: A new data leak and international journalistic investigation has named and identified the secret offshore dealings of over 500 Indians, including top Bollywood actors Amitabh Bachchan and Aishwarya Rai, industrialists K P Singh and Sameer Gehlaut, and a number of politicians.

This investigation, in which over 11 million tax documents have been scrutinized by over 100 media groups, comes from an anonymous source through  German daily Sueddeutsche Zeitung and was shared globally by the International Consortium of Investigtative Journalists (ICIJ). In India, the organization responsible for the investigation is the Indian Express.

The documents themselves, which identify over 200,000 offshore entities covering almost 40 years, come from Panama-based law firm Mossack Fonseca, an organization with offices in more than 35 countries.

The list includes Bollywood actors like Amitabh Bachchan, Aishwarya Rai Bachchan, DLF’s K P Singh, Gautam Adani’s elder brother Vinod Adani, Indiabulls promoter Sameer Gehlaut and members of the family who promote Apollo Tyres. Two politicians also figure on this list —  Shishir Bajoria from West Bengal and former chief of Delhi Loksatta Party Anurag Kejriwal.

“Amitabh Bachchan was appointed director in at least four offshore shipping companies set up in 1993. Similarly, Aishwarya Rai and her family members were registered in 2005 as directors of Amic Partners Limited. Her status was later changed to share holder before the company was dissolved in 2008. DLF promoters KP Singh acquired a company registered in British Virgin Islands in 2010. His family’s three offshore entities hold almost $10 million,” a report in the Indian Express reads.

Is this illegal?

Owning or contributing to an offshore fund isn’t an automatic crime in most jurisdictions. In India, as per the Reserve Bank of India guidelines, citizens were not allowed to start an overseas entity before 2003. However, this changed in 2004 when the central bank allowed individuals to remit funds of up to $25,000 a year under the Liberalised Remittance Scheme (LRS).

In 2013, the legal groundwork for offshore funds was finalized after individuals were allowed to set up subsidaries or invest in joint ventures abroad under the Overseas Direct Investment window. This means that before 2013, owning or contributing to an offshore bank account was mostly restricted.

The Indian Express claims that most of the offshore accounts set up by Indians identified in this particular investigation were done before the rules were changed in 2013.

In previous data leaks on high net-worth individuals who had offshore accounts, most noticeably the HSBC Geneva leaks, the people who were identified recieved tax notices and some have started being prosecuted for not declaring these offshore companies.  In 2015,  NDTV reported that the government started legal proceedings against 60 people who had been named in the Swiss leaks, indicating that they parked black or illegally obtained money in those offshore accounts.

Not tax evasion?

If an offshore fund isn’t being used as a front for black money or as a means of tax evasion, what else is it good for? One common reason that investment funds or companies are set up in offshore tax havens like Panama is because they have a number of international investors and coordinating taxation and economic logistics is much easier from a neutral location.

What is important therefore is whether companies such as DLF and Apollo Tyres, whose owners have been identified in the Panama Papers, have disclosed these offshore companies to the relevant Indian authorities. For instance, in the 2013 expose on global offshore funds, also carried out by the ICIJ and The Indian Express, Vice-Chairman of the Essar Group Ravikant Ruia was identified as having three companies in the British Virgin Islands (BVI). These offshore companies, however, had been disclosed earlier to Indian authorities.

The existence of offshore companies are tricky because even after being disclosed, their very nature allows them to be part of less-than-honest transactions. In the case of the Essar Group, a few of their offshore companies in the BVI islands have allegedly been shown to be part of a tax evasion scandal brought on by the misreporting of revenue.

Another typical reason for creating an offshore fund is in the case of individuals who also generate income from a foreign country, as in the case of noted lawyer Harish Salve who has been identified in the current Indian Express investigation. Salve, in comments to the publication, pointed out that his offshore accounts served two purposes: one to avoid becoming a UK tax resident and the other to coordinate international investments.

Another major problem with offshore funds is whether the money can be traced back to illegally obtained sources. So while high net-worth individuals such as footballer Lionel Messi and actor Amitabh Bachchan could be potentially guilty of tax evasion, if proven, other cases such as the late Iqbal Mirchi, a Mumbai ganglord, need to be scrutinized for potential money laundering.

Can we catch them?

As with the case with previous investigations into offshore accounts, a quick turnaround is vital. Dithering over whether authorities can see the list of potential offenders, launching investigations into the individuals involved, and signing specific tax treaties can all  take up valuable time while allowing  the owners of these offshore bank accounts to move their money elsewhere.

Some of the people named in the current investigation such as West Bengal’s Shishir Bajoria say that the facts are not  correct. For instance, the Indian Express notes Bajoria as being a “beneficial owner of First Names Group (Isle of Man)”. Bajoria, however, said that  he is a client of First Names Group and not an owner. When a First Names Group representative was contacted by Indian Express, they noted that the forms that identified Bajoria as an owner were an “administrative error”.

Global ripples

This new Panama offshore account investigation, apart from its India angle, also contains the names of over 100 political leaders worldwide, the most prominent of which include  Russian president Vladimir Putin, Pakistan Prime Minister Nawaz Sharif and Chinese President Xi Jinping.

The leaked data from 1975 to the end of last year provides what the ICIJ described as a ‘never-before-seen view of the inside of the offshore world’.

Inputs from agencies (PTI) were also used