Published On : Mon, Apr 4th, 2016

Panama papers: Modi govt sets up team to probe Indians in the list

Panama papers
New Delhi/Nagpur:
With 500 Indians being named in leaked Panama papers for alleged offshore holdings, the government today formed a multi-agency team to monitor exposes in this regard and vowed to take action against all unlawful accounts held abroad.

Finance Minister Arun Jaitley said that Prime Minister Narendra Modi discussed the issue with him this morning and on his advise the team has been set up comprising agencies like Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI) and Financial Intelligence Unit (FIU).

The Special Investigation Team (SIT) on black money also said that it will investigate thoroughly the reported secret list exposed by the International Consortium of Investigative Journalists (ICIJ).
“The multi-agency group will comprise various government agencies – the CBDT, FIU, FT&TR (Foreign Tax and Tax Research) and RBI. They will continuously monitor these (accounts) and whichever accounts are found to be unlawful, strict action as per existing laws will be taken,” Jaitley said.

As many as 500 Indians have been named in a massive leak of 11.5 million tax documents exposing their secret offshore dealings. An investigation by The Indian Express claimed that Amitabh Bachchan and Aishwarya Rai Bachchan are also named in the massive leak of documents from the secret files of Mossack Fonseca, a law firm based in tax haven Panama.

Other noted Indians named in the leak are real estate giant DLF’s owner KP Singh and nine members of his family, and the promoters of Apollo Tyres and Indiabulls. Adani Group’s Gautam Adani’s elder brother Vinod Adani also feature on the list, the report said.

According to the report, two years before he launched the Amitabh Bachchan Corporation Limited (ABCL) in 1995, the Bollywood superstar was appointed director in at least four offshore shipping companies. Records of international law firm Mossack Fonseca and subsequent inquiries show that the four companies, in which Bachchan was appointed director, were registered in tax havens – one in the British Virgin Islands and three in the Bahamas in November 1993.

Explained – What are offshore accounts and how they are used

What are offshore accounts?
Offshore bank accounts and other financial dealings in another country can be used to evade regulatory oversight or tax obligations. Often, companies or individuals use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.

Where are most offshore accounts?
Panama, the Cayman Islands and Bermuda are among more than a dozen small, low-tax locations that specialize in handling business services and investments of non-resident companies.

Legitimate uses for offshore accounts:
Companies or trusts can be set up in offshore locations for legitimate uses such as business finance, mergers and acquisitions and estate or tax planning, according to the global money laundering watchdog, the Financial Action Task Force.

Illicit uses of offshore accounts:
Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership. The ICIJ says the files from Mossack Fonseca include information on 214,488 offshore entities linked to 14,153 clients in 200 countries and territories.

Efforts to crack down on financial havens:
The Financial Action Task Force and other regulatory agencies publish assessments identifying weaknesses in enforcement of anti-money laundering and counter-terrorism financing efforts of specific countries and territories. Financial and legal professionals get training on how to spot potential violations, since in some cases lawyers and bankers are unaware they are handling illicit transactions. The EU has stepped up efforts to crack down on tax avoidance by multinational corporations.

Past scandals over offshore accounts:
Banking secrecy laws tend to obscure offshore financial dealings. But the disclosure of other leaked documents by the ICIJ and other organizations in late 2014 drew attention to sweet tax deals offered by the tiny European country of Luxembourg to multinational companies and ultra-wealthy individuals. In the 1980s, the Bank of Credit and Commerce International, an international bank founded by a Pakistani financier, was found to have been involved in wide-scale money laundering and other illegal financial dealings.