After Panama Papers, Bahamas: More Indians in secret tax haven list

The Indian Express, 22 September 2016

FIVE months after the Panama Papers, the biggest-ever leak of offshore entities registered by Panama-headquartered law firm Mossack Fonseca, comes the Bahama Leaks, which reveals incorporation details of more than 175,000 companies, trusts and foundations registered in Bahamas, the Caribbean tax haven.

This new cache of documents, received by the German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, and its media partners, including The Indian Express, relates to companies registered between 1990 and early 2016.

It lifts the veil of secrecy that the Bahamas offers to multinational corporations and also rich and powerful individuals by revealing the names of office bearers, shareholders or beneficial owners of the offshore entities.

Read | Indians in the list: From real estate to fashion to razor blades

An investigation of the list by The Indian Express has shown that the Bahamas Leaks has 475 India-related files linked to corporate personalities across sectors such as mines and metals, electronics, real estate, media and entertainment.

Some of them have also figured in the Panama Papers global investigation, reported by The Indian Express in April this year.

Anil Agarwal of the Vedanta Group; Kabir Mulchandani of the erstwhile Baron Group who had made it big in the domestic consumer electronics sector with Akai, Aiwa and Hitachi tie-ups in the 1990s; Fashion TV India promoter Rajan Madhu; Aman Gupta, chairman and chief executive of premium Finnish water brand Veen Waters; are some of the prominent personalities associated with companies in the Bahamas Leaks investigated by The Indian Express.

Some names that figured in the Panama Papers investigation and have come up in the Bahamas Leaks, too. The two sets of data thus intersect at several points, uncovering hidden layers of offshore secrecy.

The release of the Bahamas Leaks comes days before the September 30 deadline of the government’s much-publicised Income Disclosure Scheme (IDS). The IDS opens a rare window for individuals and corporations to declare their hitherto undisclosed income and come clean by paying 45 per cent tax as penalty.

Within hours of publication of the Panama Papers investigation by The Indian Express, the government had appointed a multi-disciplinary task force to probe the revelations. Since then, almost 100 requests for information have been sent to 12 offshore jurisdictions. In all, the Central Board of Direct Taxes (CBDT) has put 297 Indians covered by the Panama Papers investigation under the scanner.

The government may choose to include the details revealed by the Bahamas Leaks also under the on-going ambitious tax probe.

Unlike the Panama Papers, 11.5 million often-detailed emails, contracts, audio recordings and other documents from one law firm, Mossack Fonseca, the information listed in the new Bahamian documents are static in nature and provide only bare facts such as the company’s name, its date of creation, directors and the physical and mailing addresses.

But the new leak includes the names of 539 registered agents — corporate middlemen who serve as intermediaries between Bahamian authorities and offshore clients.

Among them is Mossack Fonseca and the latest ICIJ release shows that it set up 15,915 entities in the Bahamas, making the tax haven its third busiest jurisdiction. The Panama Papers showed how Mossack Fonseca helped clients use secrecy norms in the Bahamas to keep their name out of public filings.

Political and government figures named in the leaked documents include Colombia’s minister of mines and energy between 1999 and 2001, Carlos Caballero Argáez. He was listed as president and secretary of a Bahamas company, Pavc Properties Inc., between 1997 and 2008. Argáez also appeared as director of Norway Inc, a company registered in the Bahamas, between 1990 and 2015.

In the case of Neelie Kroes, European Union’s commissioner for competition policy from 2004 until 2010, records show her as a director of Mint Holdings Ltd from July 2000 to October 2009. The company was registered in the Bahamas in April 2000 and is currently active.

According to ICIJ, Kroes didn’t disclose her connection to this company in her declarations of personal financial interests in 2010 when she was European commissioner for competition or in 2014 when she was European commissioner for digital issues. Kroes, 75, is a director or a board member of several companies and also serves as an advisor to Bank of America Merrill Lynch and Uber. She remains an influential member of the Netherlands’ ruling People’s Party for Freedom and Democracy.

Kroes rejected any criticism of her business activities. Her lawyer said she denied “she was ever conflicted by ties to the private sector.”

Bahamian authorities did not reply to ICIJ’s requests for comment. In a previous statement, the Bahamas called itself “a clean, compliant jurisdiction having been deemed largely compliant with the OECD’s existing standards with respect to the exchange of tax information.”

Mossack Fonseca did not reply to ICIJ’s request for a comment. The law firm previously told ICIJ: “As a registered agent we merely help incorporate companies, and before we agree to work with a client in any way, we conduct a thorough due-diligence process, one that in every case meets and quite often exceeds all relevant local rules, regulations and standards to which we and others are bound.”

Ken-Betwa river linking project: Wildlife board panel gives nod for Phase I

The Indian Express, 20 September 2016

THE STANDING committee of the National Board for Wildlife (NBWL) cleared Phase-I of Ken-Betwa river link project in its first meeting with new Environment Minister Anil Madhav Dave as chairman.

The minutes of the meeting, held on August 23, was approved Monday.

The Rs 10,000-crore project requires diversion of 5,258 hectares of forest land, including 4,141 hectares of Panna Tiger Reserve.

As reported by The Indian Express on May 12, the project was given in-principle approval in the 38th meeting of the NBWL standing committee on May 10. Facing flak, the ministry decided to hold further deliberations with engineering and hydrological experts “in view of differing opinions on the height of the water impending structures and resulting impact.”

At the 39th meeting on August 23, the Wildlife Institute of India (WII) director “indicated that the (expert) group was convinced that reducing dam height by 10 metres will result in non-availability of water for linking”.

The proposal to drop the plan for power generation, given the project’s focus on fighting drought in the Bundelkhand region, was also shot down after the Ministry of Water Resources assured that power generation facilities would be outside the tiger reserve. Accordingly, the committee decided to recommend the project without any modification with these additional conditions:

* To compensate for direct loss of 105 sq km of tiger habitat, Nauradehi, Rani Durgavati and Ranipur wildlife sanctuaries will be integrated in Panna Tiger Reserve; affected forest villagers will be rehabilitated at project’s cost.

* The dam reservoir area will be retained as core tiger reserve with minimum activities.

* No fishing will be allowed at the dam site.

* No new mining leases will be allowed on tiger dispersal routes.

* A landscape-based plan for the area will be finalised with the National Tiger Conservation Authority in lead, assisted by WII, state forest department and the project proponents.

As Chhattisgarh coal corridor goes ahead, elephants passed over

The Indian Express, 19 September 2016

NINE months ago, Chhattisgarh East Railway Limited (CERL) informed the National Green Tribunal (NGT) that the corridor it’s building through the state’s worst man-animal conflict zone will have 24 bridges with “underpasses provided to ensure unhindered passage of elephants”. But records show that 22 of them are nowhere near established elephant routes identified by Chhattisgarh’s Forest Department.

Besides, these bridges do not meet the minimum width-height requirement — 300×5 metres — recommended by the Wildlife Institute of India for building wildlife underpasses. The NGT is scheduled to hold the next hearing in the matter on Monday.

Chhattisgarh East Railway Limited (CERL) — a special project vehicle comprising the state government (10 per cent), South Eastern Coalfields Limited (64 per cent) and Railways construction wing IRCON (26 per cent) — is developing the 180-km eastern corridor primarily to carry coal from the Korba and Gare-Pelma mines.

With a 2019 deadline, the Rs 4,000 crore project has made “15-20 per cent progress” in the first 74-km stretch, which passes through Dharamjaigarh forest division in Raigarh district, where 44 people and 39 elephants have been killed in man-animal conflicts in the last seven years.

The project will affect over 125 elephants — around half of Chhattisgarh’s elephant population — that move between Korba and Dharamjaigarh forests. These elephants mainly belong to herds displaced in the 1990s when mines came up in their native forests in Odisha and Jharkhand — Chhattisgarh did not have resident elephants earlier.

In 2005, Chhattisgarh decided to create two reserves for the migrant elephants to reduce conflict. The Centre cleared the plan in 2007, but the state backtracked later to keep its coal-rich forests open for mining.

In December 2014, while evaluating the corridor project, the Environment Ministry had underlined the need for a wildlife management plan and animal underpasses. In March 2015, Chhattisgarh’s Forest Department submitted a detailed plan for underpasses, listing established elephant routes across the proposed track in the Dharamjaigarh division. But the project got forest clearance in May 2015 without finalising either, on the condition that “sufficient underpasses for safe crossing of animals shall be made” and “an integrated wildlife management plan shall be prepared and implemented”.

CERL began work in July 2015, but two months later, the project was challenged at the NGT by Bilaspur-based lawyer Sudiep Srivastava. It was in its reply to the tribunal that the CERL listed the 24 bridges that were already part of the project that would provide as “underpasses” for elephants. Of these, only two are within 100 metres of an identified elephant path, leaving the animals to take long detours, negotiating water channels, in a conflict-ridden landscape, or risk crossing the railway tracks.

More than hundred elephants have been killed on railway tracks in India since 2003, when Bholu, the jumbo carrying a green signal lamp, became the Railways safety mascot. Already, seven deaths have been reported this year.

Asked how CERL was allowed to start work before specifying the underpass locations, Chhattisgarh’s Principal Chief Conservator of Forests B L Saran said: “This is an important project and it will comply with all (clearance) conditions. Yes, these are elephant conflict areas and underpasses are required. We are still looking into the specifics.”

Parvinder Singh, Additional General Manager, IRCON, said that there was “full coordination” among the agencies. “It is a government project. We have given the wildlife management plan to the Forest Department. If they want us to build some underpasses, we will do it. Budget is not an issue. But these are for the departments, and not activists, to decide,” said Singh, who is in charge of the project.

The One-Rupee Trick: How banks cut their zero-balance Jan Dhan accounts

The Indian Express, 13 September 2016

In August 2014, a few weeks after the launch of Jan Dhan, the government’s flagship scheme under which the unbanked get bank accounts, Kamlesh, a housewife at Purnapur village in Uttar Pradesh’s Bareilly, opened an account at the Punjab and Sind Bank’s local branch. Wife of a farmer, the opening balance in her account was zero. This wasn’t unusual — in fact, accounts like Kamlesh’s, called zero-balance accounts, made up almost half of all the 17.90 crore Jan Dhan accounts a year later given that most of the holders were poor and had little by way of savings.

But on August 5 this year, when Kamlesh got her passbook updated, she was in for a surprise. “Re 1 had been deposited in my account on September 29, 2015. I didn’t deposit the money, I don’t know where it came from. I will ask the bank about this,” she said. It’s not just Kamlesh, and it’s not just that branch in Bareilly, or even that bank.

Investigating information obtained from more than 30 nationalised and regional rural banks under the Right to Information (RTI) Act, The Indian Express went to more than 25 villages and cities spread across six states, checked individual passbooks and interviewed account holders. To find that bank officials are quietly making one-rupee deposits, many from their own allowances, some from money kept aside for office maintenance. Their ostensible goal: to reduce the branch’s tally of zero-balance accounts.

As many as 20 branch managers and officials told The Indian Express, on the condition that they not be identified, that there is “pressure” on them to show that zero-balance accounts are falling in number. “There was a perception that so many zero-balance accounts means no one is using them, so there was pressure on us to change that,” said one official.

The short-cut was the one-rupee deposit.

Indeed, as per RTI information provided, 18 public sector banks and their 16 regional rural subsidiaries held 1.05 crore Jan Dhan accounts with deposits of Re 1.

From Ajit Kumar Das’s Syndicate Bank account in Guwahati to Lallu Paswan’s Punjab National bank account in Bihar’s Barh; from Guddi Devi’s Bank of Baroda account in Rajasthan’s Sawai Madhopur to Nizam Khan’s Bank of India account in Raatibad near Bhopal.

They all had Rs 1 deposited in their zero-balance accounts. There were a few cases of despoits of Rs 2 or Rs 5, and in one case, Prem Bai of Raatibad, near Bhopal, found 10 paise had been transferred to her zero-balance account in Bank of India on July 20, 2016.

Indeed, at the macro level, the number of zero-balance accounts has fallen sharply. From 76% in September 2014 to almost 46% in August 2015, then a steady fall to 24.35% on August 31, 2016.

In fact, RTI information obtained until August 2016 shows that the percentage of accounts with such deposits of one rupee is significant across banks and across the country.

Take, for instance, the case of Punjab National Bank, which has opened 1.36 crore Jan Dhan accounts of which 39.57 lakh (almost 29%) are those with deposits of Re 1. Bank of Baroda has 1.4 crore Jan Dhan accounts of which 12.97 lakh (9.26 per cent) have deposits of Re 1. There’s also UCO Bank with 74.6 lakh Jan Dhan accounts of which 11.06 lakh (14.83 per cent) have deposits of Re 1.

And those were just the top three. Punjab and Sind Bank, which currently has the least number of zero-balance accounts (0.40%), refused to provide details of Jan Dhan accounts with Re 1-Rs 10 in deposits.

6 states, 1 story: How they got the rupee

At the ground level, The Indian Express spoke to over 20 branch officials of various nationalised banks and their regional rural subsidiaries in Assam, Bihar, Chhattisgarh, Madhya Pradesh, Rajasthan and Uttar Pradesh who admitted, on condition of anonymity, that the deposits of Re 1-Rs 10 were sourced from various perks and other expenditure heads that come under their jurisdiction.

These include entertainment allowance, conveyance allowance, canteen subsidy, office maintenance funds, and fee obtained for Demand Drafts and online transfers. At least 10 branch officials said they had deposited these amounts from their own pockets, just to keep the accounts alive.

They said that most of these cash deposits were done manually with staff filling pay-in slips in bulk. In a few cases, the money was transferred electronically by the banks’ Business Correspondent Agents (BCA) or Bank Mitras — contract staff who take banking facilities to rural clients — who are allowed to open accounts to deposit money they take from account holders under Jan Dhan before transferring them to individual accounts.

For example, in Rajasthan’s Sawai Madhopur district, out of 40 bank passbooks scrutinised by The Indian Express, 15 had Re 1 credited by transfer as the first entry. None of the account-holders knew the source of these entries.

When The Indian Express visited Barh in Bihar, around 200 Jan Dhan account passbooks with deposits of Re 1 were found in the office of a BCA. “I was asked by the branch manager to deposit Re 1 in around 120 Jan Dhan accounts between October 9, 2015 and October 11, 2015. The bank officials said they would give this amount to me later. In many other accounts, bank staffers themselves deposited the amount to remove the zero balance,” said the agent.

“We took money from expenditure head of the branch and put Re 1 or Rs 2 in the accounts having zero balance. This was just to keep those accounts operational,” said a senior official of Punjab National Bank in Barh.

“We have noticed some such cases. There was pressure from the top level and some bank staffers did it themselves. But such cases are only a few,” said an official at a Central Bank of India branch in Bareilly.

“In my branch, nearly 1,000 such accounts were opened. Due to pressure from the top level, I deposited Re 1 in many of those accounts myself,” said a branch official at Baroda UP Gramin Bank in Bareilly, a subsidiary of Bank of Baroda.

“I was heading another branch before being transferred here and I had personally put Re 1, Rs 2 and Rs 3 in around half of the around 1,000 accounts opened under Jan Dhan in that branch. It was the usual practice in the branch due to pressure from the top,” said an official of the Aryawarta Gramin Bank, a subsidiary of Bank of India, in Mainpuri, UP.

An official at Bank of Baroda’s Baler branch in Rajasthan claimed that the bank’s “business correspondents may have put Re 1 in those accounts to encourage banking practices” among villagers.

“The branches have certain targets and there is pressure. For the last one year or so, we have ensured that new accounts are opened with some deposit. But there are issues with accounts opened earlier in bulk. It is difficult to persuade those account holders to deposit money,” said the official.