The Players in Paradise Papers: Who Are the People Named and Why?
The Paradise Papers are a record of 13.4 million corporate papers leaked from Appleby, a Bermuda firm; Asiaciti Trust in Singapore, and government corporate registries in 19 “tax haven” countries. The Indian Express, who has investigated the documents with an India-connect, has named 714 Indians in the papers.
Owning an offshore account is not illegal by itself, with India having double-taxation avoidance agreements (DTAAs) with several countries, but the information published in Paradise Papers enables financial regulators to zero down on potential financial malpractices.
Minister of State Jayant Sinha
Jayant Sinha was the Managing Director of the India operations of Omdiyar Network from 2009 to 2013. Omdiyar Network invested in a US company called D Light Design, founded in 2006, and has a subsidiary of the same name in Cayman Islands. D Light Design took a loan of USD 3 million through its Cayman subsidiary in 2012, and Sinha is a signatory in the document approved by the Board of Directors of D Light Design. According to Sinha’s statement, he served on the Board of Directors at D Light Design till November 2014.
Questions That Arise:
Did Sinha mention in his declaration to the Election Commission that he served as the Director of D Light Design in 2014 and 2016? The Indian Express reports that Sinha did not mention the fact that he served as the Director of D Light Design in his declaration to the Election Commission while he was being nominated for Lok Sabha polls in 2014, or to the PMO as Minister of State in 2016.
In his response to The Indian Express, Sinha specifies that he had disclosed his consulting fees and shares when he was the Director of D Light Design.
The question which arises here is whether Sinha declaring Directorship is different from his 2014 and 2016 declaration of fees and shares earned by Sinha from his time as the Director?
As far as his interest in Omidyar Network is concerned, in his October 2016 declaration to the PMO, Sinha mentions, “The declarant may be entitled to carried interest in certain investments made by Omidyar Network entities in the years 2009 to 2013. The value of the carried interest that may be received by the declarant (if any) is not capable of determination,” reports The Indian Express
Dr Ashok Seth
Dr Ashok Seth is the chairman of Fortis-Escorts and according to The Indian Express investigation in the Paradise papers, he was given shares by Biosensors International Group Ltd, a Singapore-listed company, which manufactures medical devices including stents, and was incorporated in Bermuda in 1998. He was given these shares before the company went public, subsequently prescribed these stents to patients and cashed in on these shares.
Questions That Arise:
Was there a conflict of interest in Ashok Seth’s shareholding in Biosensors International Group Ltd? The Indian Express reports that the minutes of the meeting of the Biosensors Board on 19 October 2004 show that Seth was “offered 5,000 shares of the company.”
In his response to the allegation, Seth says that while he was offered 5,000 shares in 2004, he bought the shares in April 2013, paying $90,000 for them. He kept the shares for three years and sold them in 2016, making a profit of Rs 54 lakh on the purchase. According to Seth, this was declared in his income tax returns.
Did he prescribe the Biomatrix stent, produced by Biosensors during these three years? In a statement to The Indian Express, Seth says that from April 2013 to August 2013, he used seven Biomatrix stents. Till the time he sold his shares in August 2016, he claims that he used no Biosensors product, gave no related lectures, and declared his “shareholding at scientific peer meetings.”
Manyata Dutt is the wife of Hindi film actor Sanjay Dutt and features in the Paradise Papers after she was appointed as the Managing Director, Director, President and Treasurer of Nasjay Company Limited set up in Bahamas in April 2010. The address given in the documents is specified as her address in Bandra West in Mumbai.
Questions That Arise
While the illegality of her position is unclear at the moment, in a statement to The Indian Express, Dutt’s representative said that “…all the properties, company or body corporate or shares in any company are declared in the balance sheet.”
The Paradise Papers signal more trouble for liquor baron Vijay Mallya, who is wanted for debt default in India. According to The Indian Express investigation, the papers show that after Mallya sold United Spirits Limited India (USL) to the Diageo group in 2013, the company was put through a restructuring which led to the diversion of funds.
When Linklaters LLP in London restructured USL’s complex holding structure, over 1.5 billion dollars were allegedly diverted to four subsidiaries for a period of seven years – USL Holdings Ltd (BVI); USL Holdings (UK) Ltd; United Spirits (UK) Ltd and United Spirits (Great Britain) Limited (UK). According to The Indian Express, records also show that “Diageo also absolved Watson Limited, an entity owned by Mallya in his personal capacity, of its dues to a USL group company to the tune of 4.4 million pounds” through “novation.”
Appleby, the Bermudan law firm at the center of the Paradise Papers, shows popular Hindi film actor Amitabh Bachchan as shareholder of a digital media company set up in Bermuda called Jalva Media Ltd in June 2002. Launched in January 2000, the company tied up with IBM in 2001, which is reportedly when Amitabh Bachchan and Silicon Valley venture investor Navin Chaddha emerged as shareholders of the company. It was declared that the company “shall stand dissolved” in 2005, but according to The Indian Express, Jalva-India “survived on paper” till 2011.
Questions That Arise
Prior to the introduction of the Liberalised Remittance Scheme in 2004, all investments made abroad by resident Indians needed the prior approval of the Reserve Bank of India. Given Bachchan was a shareholder in 2002, did he get permission from the RBI to purchase those shares? Furthermore, did he disclose his shareholding in his tax filing? The Indian Express states that it is “unclear” whether Bachchan declared his shareholding to the RBI, and all Jalva-Bermuda shareholders, including Amitabh Bachchan, have refused to comment.