A leak of 6.4 million documents, more than a million emails, almost three million images, and nearly half a million spreadsheets has revealed the hidden wealth, tax workarounds and in some cases, money laundering by some of the global elites.
The expose, called Pandora Papers, was led by the International Consortium of Investigative Journalists (ICIJ) in Washington DC. The leak discloses the names of 330 politicians from 90 countries who used secret offshore companies to hide their wealth.
These politicians include — Russian President, the King of Jordan, Azerbaijan's leading family, Czech Prime Minister, Kenyan President and former British Prime Minister Tony Blair.
Besides politicians, the data also divulges financial secrets of celebrities, businessmen, religious leaders, and drug dealers from several nations, including India, Pakistan, Russia, the United States and Mexico. These people have been found with off-the-shelf companies and private trusts in jurisdictions like Panama, Dubai, Monaco, Switzerland, British Virgin Islands and the Cayman Islands among others that are loosely regulated for tax purposes but have tight secrecy laws.
According to The Indian Express, which was among the 140 media organisations working on the global investigation, at least 380 persons of Indian nationality have been named in the Pandora Papers.
The documents reveal that former Indian cricketer Sachin Tendulkar, his wife Anjali Tendulkar and father-in-law Anand Mehta were the beneficial owners of a British Virgin Islands-based company that was liquidated in 2016, just three months after the Panama Papers expose.
Read More | Pandora Papers: Leaked records reveal illegal riches of world leaders, powerful politicians, billionaires, celebrities
The leak also discloses that Anil Ambani has a web of offshore firms, worth $1.3-billion. This is when Anil Ambani, in 2020, told a London court that his net worth was zero following a dispute with three Chinese state-controlled banks.
The husband of Biocon promoter Kiran Mazumdar Shaw, John Shaw, has also been named in the leak. It is reported that he set up a trust whose in-charge is a person who was banned by SEBI for insider trading.
Additionally, the sister of fugitive Nirav Modi, Purvi Modi, has also been featured in the list. She is reported to have set up an offshore trust just a month before the diamantaire fled India.
The Indian Express has said that the names of more Indians, involved in tax evasion using lax jurisdiction of tax havens, will be revealed in the coming days. "Of the 300-plus Indian names, the offshore holdings of as many as 60 prominent individuals and companies were corroborated and investigated. These will be revealed in the coming days," said the IE report.
How the fraud is orchestrated
The Pandora Papers focuses on how the global elites use offshore firms and trusts to evade tax and hide ownership of money and assets. For instance, an individual might have a property in India but own it through a complex network of companies based in other tax haven countries.
While India recognises offshore trusts, it is the intention of the individual that matters. Legitimate trusts are also set up in other countries for genuine business purposes but some individuals use offshore trusts just to project a degree of separation from their assets.
The offshore trusts also provide enhanced secrecy, giving them a layer of protection from financial investigation agencies and international tax authorities. In addition, rich individuals often protect their NRI children from paying taxes by making them the only beneficiary of an offshore trust.
Several citizens, from nations where the inheritance tax law is in place, also set up offshore trusts to protect their next generation from paying the inheritance tax. In India, former Prime Minister Rajiv Gandhi had abolished the inheritance tax (estate duty) in 1985.
How big is the fraud?
According to an ICIJ estimate, the wealth directed towards the offshore territories could range anywhere between $5.6 trillion and $32 trillion. It added that those included in the list hid nearly $600 billion (in total) in taxes through such practices in tax havens.
Before Pandora Papers, Panama and Paradise Papers had revealed how the global rich are using offshore entities to evade tax and hide assets.