In the biggest document leak in history, more than 11 million documents have been leaked from the secret files of law firm Mossack Fonseca, headquartered in tax haven Panama, revealing a list of individuals who paid the firm and bought the benefits of the secretive, lax regulatory system, in which it operates, to set up offshore entities in tax havens across the world.
From Russian President Vladimir Putin to Hollywood actor Jackie Chan, the documents have practically crushed the global elite. With 29 billionaires from the Forbes Top 500 Richest List, also revealed are the identities of 500 Indian figures. Also included is Ian Cameron, British Prime Minister David Cameron's father. He ran an offshore account to avoid paying taxes in Britain, hiring a small army of Bahamas residents – including a part-time bishop – to sign its paperwork.
The most prominent names are of 12 world leaders; President of Ukraine, Petro Poroshenko, Alaa Mubarak, son of ousted Egyptian President Hosni Mubarak, Ex-Vice-President of Iraq, Ayad Allawi, King of Saudi Arabia, Salman bin Abdulaziz bin Abdulrahman Al Saud, President of the United Arab Emirates, Emir of Abu Dhabi, Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, Prime minister of Iceland Sigmundur Davio Gunnlaugsson, President of Russia, Sergey Roldugin, Former Emir of Qatar, Sheikh Hamad bin Khalifa Al Thani, Li Xiaolin, daughter of Li Peng, the former Premier of China, Rami and Hafez Makhlouf, cousins of Bashar Assad, the President of Syria, Clive Khulubuse Zuma, nephew of Jacob Zuma, President of South Africa, Maryam Safdar, Hasan Nawaz Sharif and Hussain Nawaz Sharif, children of Nawaz Sharif, prime minister of Pakistan, and former Pak prime minister the late Benazir Bhutto.
It all started in 2014, when reporter Bastian Obermayer, from German newspaper Süddeutsche Zeitung was contacted by a still-unknown figure asking if he was interested in some data. The source offered the newspaper documents involving 214,488 companies and 14,153 clients of Mossack Fonseca, one of the world's largest creators of shell companies. Obermayer was offered the data through an encrypted channels. Zeitung soon contacted and later collaborated with Washington-based International Consortium of Investigative Journalists, a non-profit collective of 190 journalists across more than 65 countries, seeking to wean out cross-border crime and corruption, to process the documents. Also involved was Indian newspaper, The Indian Express. Obermayer said the data they received was from 1977 through 2015. The group of journalists verified the data's authenticity by comparing it to public registers, witness testimony and court rulings.
Amitabh Bachchan, Aishwarya Rai Bachchan, corporates including DLF owner KP Singh and nine members of his family, Gautam Adani's elder brother Vinod Adani, all figure on the list. Also present isMumbai ganglord, the late Iqbal Mirchi. It was also revealed that the list includes not just individuals, but also details of hitherto unknown deals, in some cases, involving the government too; Cricket franchise deals, and linkages to those who have previously been under the CBI or Income Tax radar. RBI norms dictate no Indian citizen could float an overseas entity before 2003. While it let people buy shares under LRS, it never allowed them to set up companies abroad. The document leak – now known as the 'Panama Papers' – revealed that most of the companies were set up long before the rules were changed, with the purpose to park foreign exchange. It was only in August 2013 that people were allowed to set up subsidiaries or invest in joint ventures under the Overseas Direct Investment window.
Exposes like this will make things more transparent: Arun Jaitley
Responding to the leak that involves Indians, finance minister Arun Jaitley vowed strict action against all “unlawful” accounts held abroad. With advice from Prime Minister Narendra Modi, Jaitley set up a committee involving agencies like CBDT, RBI and FIU. Making India the first country to form a committee since the leak, the special investigation team on black money said it would investigate thoroughly the reported secret list.
“The multi-agency group will comprise various government agencies; the CBDT, FIU, FT&TR 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,” said Jaitley.
He also warned of more names coming up in the next few days. Stating that the 'Panama Papers' give details of accounts and assets held by some Indian entities in Panama, Jaitley said this is the fourth collective bunch of such information and investigation that have been made.
“The first related to Liechtenstein accounts against all persons involved in that prosecutions have already been launched. Assessment orders have been passed. Then details came in 2011 with regard to HSBC account holders. Five hundred and sixty nine out of those account holders have been traced and 390 were illegal and already 154 set of prosecutions have been filed,” he said. “The prosecutions are taking their normal course and assessment proceedings and their consequential actions are on.”
Mossack Fonseca: Treasure of offshore entities
Located in Panama, law firm Mossack Fonseca was founded in 1977 by Jurgen Mossack and Ramon Fonseca Mora. The company is one of the world's top creators of shell companies, corporate structures that can help hide ownership of assets. Its internal files contain information of 214,488 offshore entities made for people from over 200 countries.
Documents released contain nearly information about 15,600 paper companies that banks set up for clients who want to keep their finances under wraps, including hundreds created by international giants UBS and HSBC. Data includes emails, financial spreadsheets, passports and corporate records showing the secret owners of bank accounts and companies in 21 offshore jurisdictions. Most of the services provided by the offshore industry are legal if used by abiding the law. However, the documents showed that banks, law firms and other offshore players have often failed to follow legal requirements that make sure their clients are not involved in criminal enterprises, tax dodging or political corruption.
Fonseca offers Indian investors offshore options to lodge their income and resources from foreign countries and avoid capital gain tax in India. The name is not really new to investigators in New Delhi. Income Tax department of India has been pursuing individuals and companies that allegedly sought to evade taxes by parking their cash in tax havens, since 2013. The firm's records shows that India sent notices to authorities in tax havens, including in the Bahamas, seeking details of beneficial ownership and finances of at least six offshore companies managed by it.
To make matters worse, it has also been known that Mossack has worked along with at least 334 individuals or companies that have been part of the United States Treasury Department's Office of Foreign Assets Control. The companies under the US list are sanctioned and blacklisted for funding the civil war in Syria. An MF spokesperson defended the company saying it relies on intermediaries such as banks and other law firms to review the backgrounds of the customers that they refer. These middlemen are supposed to notify the firm “as soon as they have knowledge of a client of theirs having been either convicted or listed by a sanctioning body.” Files also show MF worked with Syrian President Bashar al-Assad's cousin Rami Makhlouf. The US officials had imposed sanctions on the man as early as 2008, flagging him as a “regime insider” who “improperly benefits from and aids the public corruption of Syrian regime officials”.
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Indian Clients that warmed up to Panama
Amitabh Bachchan – Veteran Actor
Aishwarya Rai Bachchan – Well-acclaimed Actress
Onkar Kanwar – Chairman, Apollo Group
Shishir Bajoria – Promoter, SK Bajoria Group
Harish Salve – Former Solicitor General, India
Jehangir Sorabjee – Honorary Consultant Physician, Bombay Hospital
Mohan Lal Lohia – Chairman Emeritus, Indo Rama Synthetics
Zavaray Poonawalla – Head, Management Committee of the Royal Western India Turf Club
Rajendra Patil – Businessman and Educationalist
Abdul Rashid Mir – Founder and CEO, Cottage Industries Exposition
Gautam and Karan Thapar – Crompton Greaves Ltd
Ashwani Kumar Mehra – Owner, Mehrasons Jewellers
Gautam Seengal – IT Consultant
Vinod Ramchandra Jadhav – Chairman, Sava Healthcare
Ashok Malhotra – Former Indian Cricketer
K P Singh – Promoter DLF
Vinod Adani- Elder brother, Gautam Adani of Adani group
