Here is what the Paradise Papers are and what they tell us

A year after the Panama Papers reveal, another leak has exposed thousands of potentially illicit financial activities.

Published: 06th November 2017 11:05 PM  |   Last Updated: 07th November 2017 01:19 PM   |  A+A-

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India ranks 19 in number of names out of 180 countries represented in the Paradise Papers' data. There are 714 Indians in the list. (Photo | Reuters)

By Express News Service

A year after the Panama Papers revealed details of offshore assets held by many of the world's wealthy and influential, another leak has exposed thousands of potentially illicit financial activities. What are Paradise Papers and what do they tell us?

What are the Paradise Papers?

Paradise Papers are a trove of over 13 million documents obtained by two journalists working for the German newspaper Süddeutsche Zeitung.  The leaked documents show how multinational companies and thousands of wealthy individuals, including 717 Indian businessmen, use offshore accounts, mostly to evade taxes. Most of the documents were leaked from a Bermuda law firm called Appleby. They are being investigated by the International Consortium of Investigative Journalists. 

What is International Consortium of Investigative Journalists?

The ICIJ is a Washington-based collaborative of investigative journalists. Its members include over 200 investigative journalists from 70 countries. They collaborate on cross-border investigative journalism projects and have in the past exposed tax evasion and international smuggling and money laundering. Last year, ICIJ released a trove of papers called the Panama Papers, which revealed the offshore activities of the world's wealthy. It led to the resignation of Iceland PM Sigmundur Davíð Gunnlaugsson and Pakistan’s Nawaz Sharif. The ICIJ was founded in 1997 by the Centre for Public Integrity, an American non-profit investigative journalism organisation.

What do the Paradise Papers reveal? 

The Paradise Papers reveal that thousands of wealthy individuals, including some very powerful ones, stashed their money in offshore accounts and firms located in tax havens like Bermuda and the Cayman Islands, to avoid paying taxes. Among other things, the papers also revealed that 13 million pounds from one estate of Queen Elizabeth II were invested in an offshore firm located in the Cayman Islands. It was also found that US commerce secretary Wilbur Ross continues to maintain a stake in a shipping company called Navigator Holdings that did business with a Russian company that is under US sanctions. The papers revealed that several hundred Indian businessmen hold offshore bank accounts and are investors in firms registered in various tax havens. According to the Indian Express, of the 180 countries that appear on the list, India ranks 19th in terms of the number of people having tax-haven accounts or firms.  

Which Indian entities figure in the Paradise Papers?

The Indians named in the Paradise Papers include Karti Chidambaram, Jayant Sinha, Niira Radia, R K Sinha and Sachin Pilot. United Spirits Limited of India, a company owned by liquor baron Vijay Mallya is also named among the firms that have offshore financial assets. 

What is Appleby?

Appleby is the firm at the centre of the Paradise Papers leaks. A large chunk of the 13.4 million leaked documents belongs to this Bermuda-based law firm. So, what does Appleby do? It provides legal assistance to companies and individuals seeking to invest in offshore territories. The firm helps its foreign clients set up and register trusts and companies in offshore territories with low tax rates like Bermuda, Cayman Islands and the British Virgin Islands. The firm has 60 partners and operates from 10 locations around the world. 

What are tax havens?

It is well-known that many of the world’s wealthy stash their fortunes in offshore tax havens. Businessmen set up trusts and companies in territories like Bermuda, Panama, Cayman Islands and so on. In most cases, these companies function as the subsidiaries of a parent company. The process is often simple and in places like Panama require only a matter of 48-72 hours to set up. The registration fees are nominal. Once the company/trust is set up, local agents are hired to manage its finances on behalf of the real owners. A portion of the profits of the parent company goes directly to offshore entities. The money is then deposited into a bank that operates, in most cases, in the same country. The banking sector in most of these countries guarantees confidentiality. Thus, it enables big businesses to avoid paying taxes in their home countries. 

Indians in paradise

Over 700 Indians have been named in the Paradise Papers. Here are some of them. Being listed here does not mean that they are wrongdoers. This is yet to be proven. 

R K Sinha
The BJP MP founded private security firm Security and Intelligence Service, which was registered in Malta. It was found that SIS International Holdings Limited, a company registered in the British Virgin Islands, owned a controlling stake in SIS.  

Jayant Sinha
The Paradise Papers revealed that Jayant Sinha served as a director of D Light Design which has a subsidiary in the Cayman Islands. 

Amitabh Bachchan
The veteran actor held stakes in a media company registered in Bermuda in 2002. The company was dissolved in 2005. 

Manyata Sanjay Dutt
The wife of Bollywood actor Sanjay Dutt served as a director of Nasjay Company Limited, a firm registered in Bermuda.  

Pavitra Singh Uppal
A real estate developer, she founded a firm that was registered in the Dominican Republic. 

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