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NEW DELHI: In early 2016, a scandal broke out about the Panama Papers. These related to hidden assets in the Mossack Fonseca law firm in Panama run by two German lawyers. A list of 500 Indians was leaked to the press.
This was part of an international campaign spearheaded by the International Consortium of Investigative Journalists (ICIJ) and linked in India, to The Indian Express which published 500 names of tax defaulters.
No significant punitive action was taken at the time, and the issue was sidelined, and the list of defaulters was later suppressed. In the first list of 100 out of the 500 defaulters in the Panama Papers, some of the wealthiest industrialists were named.
The initial valuation of the assets of the top 100 was ₹16, 200 crores.
Despite this evidence, the Modi government was very slow and selective in unearthing the black money. After two years, the Finance Ministry has little to show for it laboured efforts. It has claimed undetected income of ₹1,140 crore which is a small fraction of the ₹11,200 crores in the initial list of 100 defaulters, not to speak of the rest of the 400 defaulters. Intriguingly, the clients under probe are 426 yet their relatively small black income is much smaller than the ICIJ had exposed.
Moreover, only 16 prosecutions have been filed under minor sections of the 1961 Income Tax Act. A majority of the 16 cases were filed under Section 277(making a false statement in verification) and Section 276 (concealment or transfer of property to avoid tax recovery) of the 1961 Income Tax Act.
Both sections attract a jail term between few months or two years, a relatively minor punishment given the huge amounts involved.
Those indicted now are:
1) Bharmal Lodha: Records of Mossack Fonseca reveal the company was registered in 1996, and struck of the records in 2012. Lodha had, in 2016, told The Indian Express that the company had been set up by his former employer when he was working with a steel firm in Dubai.
2) The Indian Express reported that Anurag Kejriwal, former Delhi chief of Lok Satta Party, and his wife Uttara Kejriwal were linked to four BVI companies and two Panama foundations. His case was filed in a Kolkata court as recently as April 21, 2018.
3) Rajendra Patil, son-in-law of veteran Congressman and Karnataka Horticulture Minister Shamanur Shivashankararappa. Patil now faces prosecution under Sections 277 and 276CC of the IT Act (wilful attempt to evade tax) in a case filed in Bengaluru.
4) Amit Dineshchandra Patel & Rahul Arunprasad Patel are Chairman and Managing Director of Sintex Industries, the world’s largest manufacturer of plastic water tanks. In December 2017, the Enforcement Directorate assets worth Rs. 48 crore in connection with the Panama Papers probe.
5) Mehool Parekh & Aanand Mahendroo are the two shareholders of a BVI company called Goldstone Media Pvt. Ltd. Income Tax authorities have filed prosecutions in Mumbai on February 20, 2018. ICIJ data shows that the company was incorporated in 2008 and struck of Mossack Fonseca records in 2010 with their Mumbai addresses given in the records.
6) Dhaval Suresh Kumar Patel’s company Rosie Park Ltd. was incorporated in 2011 and struck off records in 2013. His company was one of the two filed by the Income Tax’s Mumbai unit last year.
7) Sushila Devi Chopra, Prerna Chopra & Gaurav Kumar Chopra have been shareholders of Jelenta Investments Ltd. in the BVI, April 9, 2010. JIL is the shareholder of Zenith Metallik Alloys Ltd. The prosecution case against Section 277 of the IT Act was filed against the threesome on December 9, 2016, and were among the first prosecutions filed.
8) Prakashchandra Kirtilal Bhansali a resident of Mumbai had a case filed against him under Section 277 of the IT Act on February 20, 2018.
9) Yashesh Bharwada was the other Panama Papers case sent to court in Mumbai on November 15, 2017. He was the sole shareholder of a BVI firm called Esteia Group Ltd. in July 2013.
10) Rajanya Aditya Ravasia has a case filed against him on February 20, 2018. He was a shareholder in two companies in Samoa in 2010 and they were struck off after default in 2013.
11) Infinity India Advisors Pvt. Ltd.are the only company to figure on the Panama Papers list. The company was set up in the BVI in 2008 and “inactivated” in 2012. Mumbai based chartered accountant, P.P. Shah & associates are listed as an intermediary of the firm.
The intriguing point in this list is the complete absence of the top industrialists of the country in the Panama Papers and the more recent Paradise Papers in which also the ICIJ was involved in the investigations. It is not that the industrialists names are not listed. They are in both the Panama Papers and if not there, in the Paradise Papers. Taken together 500+214 =714 entities are identified as having untaxed off shore accounts. But out of the 714 top industrialists, private bankers, speculators and the like listed in the Panama and Paradise Papers the most wealthy persons are absent.
As someone who saw a large slice of the Panama Papers and has spoken to several people who have seen both sets of documents, there has evidently been a massive cover up of well over 600 wealthy entities. Those listed by The Indian Express now are only 11 entities, a significant number being charged only in 2018. There can be no other explanation that there is a coverup with the more affluent not publicly tried or, at any rate, not subject to any punishment.
Since General Elections are due in a year’s time, politicians can not afford to alienate the plutocracy, the fabled rich. So the scanty few have been subjected to scrutiny and possible action. But some 95 per cent of the off shore black money is not in public hands.
So the moral in our polity is this: money talks more persuasively than reason and honesty.
