Panama Leads to India’s Narrowest Alleys

In April 2016, the world was blown away by the Panama Papers - a massive 2.6 terabyte leak of confidential documents revealing the deep web of international corruption and tax evasion from the world's political and business elite.

Panamanian law firm Mossack Fonseca which helps foreigners to set up international companies to buffer their financial assets leaked the papers to the International Consortium of Investigative Journalists to uncover the offshore holdings and latent financial dealings of some of the world's most filthy, munificent and renowned names. It is an extensive investigation, based on a massive trove of documents provided by an anonymous source. Around 140 political figures from over 50 countries, including 12 current or former heads of states are part of this probe.

The International Consortium of Investigative Journalism, based in Washington, said the cache of 11.5 million records features over 500 Indians linked to offshore firms. The Indian Express, an English daily, undertook an 8-month long investigation into the data leak.

The repercussions of the Panama Papers leaks are being felt in India as well. A roster of rich and famous people, comprising billionaire property baron Kushal Pal Singh, real estate magnate Sameer Gehlaut, and  the Adani brothers - Vinod Adani and Gautam Adani have been exposed. The list uncovered also includes veteran actor Amitabh Bachchan and his daughter-in-law Aishwarya Rai Bachchan.  Aishwarya Rai Bachchan has said the report is “totally untrue.” Real estate tycoons Singh and Gehlaut have said that full disclosures have been made to the suited authorities and that they have not defied any laws.

The government has welcomed the disclosure of Panama Papers and Prime Minister Narendra Modi, who had vowed to retrieve India’s black money from offshore shelters as part of his top electoral promise in 2014, has ordered an investigation consisting of tax authorities, federal investigators, as well as the central bank.

India’s erstwhile Foreign Exchange Regulation Act (FERA) had imposed regulations and restrictions for long on residents from transferring funds abroad due to foreign exchange deficit in the country, but, billions were siphoned off to foreign havens. The foreign exchange rules were simplified and eased in the year 2004 with the Liberalized Remittance Scheme that allowed individuals to remit $25,000 per annum, the limit of which today stands at $250,000.

There is no shortfall in rules and regulations for foreign exchange transactions in India. The Prevention of Money Laundering Act, The Foreign Exchange Management Act (a less oppressive version of FERA), the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, the  Income-Tax Act and the Prevention of Corruption Act are some of them. However, an observation from a technical point disregards the spirit of these laws. Some people dissent that they had not set up any offshore company which was illegal; they only acquired them, which was permitted, while others say that they are non-resident Indians (NRI) to whom the Indian tax and other rules and regulations don’t apply.

The Indian Express has promised many more revelations in the days to come. The untold is yet to be revealed.