Get our money back! Swift action needed on the Pandora Papers
The problem is not that some people are getting rich. It is that people are becoming rich by evading tax, and transferring and parking ill-gotten gains in tax havens abroad. The latest Pandora Papers expose by the International Consortium of Investigative Journalists (ICIJ)—a network of over 600 journalists who have trawled millions of documents sourced from 117 countries—showed how a self-perpetuating elite made up of politicians and businessmen have used the anonymity of shell companies and offshore tax havens to conceal their assets. Among Indians, the findings include Anil Ambani, who declared bankruptcy in a UK court but holds unaccounted assets in 18 front companies, and Nirav Modi’s sister, who parked money in a trust just a month before he fled India.
At the international level, 35 current and former political leaders and over 300 top public officials have been creaming off their economies. For instance, the King of Jordan secretly splurged £70 million on UK and US properties, while Russian President Vladimir Putin acquired secret assets in Monaco. In a remarkable inquiry to pierce the corporate veil, the Pandora Papers show how those who are supposed to be in debt to Indian banks for thousands of crores of rupees have hidden their assets by acquiring obscure companies abroad that in turn own massive assets.
These are not just rogue defaulters. It is now an international system that knits together the rich with compliant banks, law firms and accounting wizards who work together to evade the law. The IMF estimates the use of tax havens has cost governments worldwide up to $600 billion in lost taxes each year. It is commendable that the Union government has immediately ordered a multi-agency probe. But such probes have been ordered in the past too, with the promise of bringing back the laundered money to Indian shores. There have been the Panama Papers and the Paradise Papers in the past, and there have been SITs set up. But there has been little closure. If we don’t see swift action soon, cynicism about the government’s intent will begin to set in.