LOKESH SHARMA, managing director of sports management major Twenty First Century Media (TCM) Private Ltd, has two companies of his own registered in the tax haven of British Virgin Islands (BVI), according to The Panama Papers. A third company registered in BVI is a subsidiary of TCM.
TCM, which was set up in 1993, claims to be India’s “foremost sports marketing and management company”, with revenues of over Rs 56 crore in 2014-15. Its service portfolio includes sports marketing consultation, athlete representation, sports tourism and hospitality. Its 100% subsidiary, Peppermint Management Corp Ltd, is registered in BVI.
According to Mossack Fonseca documents, the two companies in which Sharma is the sole shareholder are Margarita Services Ltd, incorporated in July 2011, and Mardi Gras Holdings Ltd, incorporated in April 2015. He is also the ultimate beneficial owner of the third company (Peppermint), which was promoted by TCM, initially with Naynesh Desai, a solicitor in the UK-based legal firm DDO Solicitors, as a minority partner. Mossack Fonseca is the registered agent for all three companies.
TCM, founded by Sharma, owned 90 % stake in Peppermint Management Corp, while Desai held the remaining 10 %. TCM held 900,000 shares of $1 each; and Desai, 100,000 shares of $1 each. Desai’s shares were ultimately bought by TCM.
Mossack Fonseca files show Sharma was appointed a shareholder in Margarita Services on July 4, 2011, and as a director on February 2, 2012. Although the authorised capital was $50,000, comprising 50,000 shares of $1 each, Sharma holds two shares with no par value. In emails, the service provider for Margarita, Chesterfield Group Ltd, informed Mossack Fonseca that they intend to increase the share capital to $150,000.
In Mardi Gras, Sharma holds 50,000 shares of $1 each. Within a month of fixing the capital at $50,000, Chesterton, representing Mardi Gras, asked Mossack Fonseca if the capital could be increased to $1.5 million, comprising 1,450,000 shares, each of $1 face value, and what due diligence documents would be required.
But in October 2015, Chesterfield asked Mossack Fonseca to put the case on hold until further instructions.
In its annual return for 2014-15 filed with the Registrar of Companies in India, TCM stated Peppermint Management Ltd was a 100 % subsidiary. Peppermint’s correspondence address was a post office box number in Cyprus. In the “Source of Funds/ Wealth” declaration form submitted to Mossack Fonseca, the company stated its source of founds as “proceeds from contractual obligations”.
Peppermint is just one of TCM’s 16 subsidiaries. According to TCM’s submission to the Ministry of Corporate Affairs, the company invested a total Rs 9.87 crore in all these subsidiaries.
While Margarita Services and Mardi Gras Holdings, which are held solely by Sharma, do not have a high initial capital, Peppermint Management has a total paid-up capital of $1 million. This is high when compared with the capital of most other BVI companies. When Mossack Fonseca sought to know the reasons for this, Chesterfield said it was because a loan by TCM to Peppermint was converted into equity.
In financial statements provided to the Registrar of Companies on its subsidiaries, TCM stated that Peppermint Management’s share capital was Rs 5.79 crore. The company invested Rs 6.28 crore, and recorded a turnover of Rs 5.94 lakh with a loss of Rs 12.97 lakh.
RESPONSE: Asked if he had filed information about Margarita Services in the returns filed for 2011-12 and the subsequent years, Lokesh Sharma said it was “not relevant”, since they did not proceed to acquire the company.
“A BVI company was intended to be acquired through an overseas solicitor. However, we did not proceed in this matter. We scanned all our records and can state with certainty that I have never received any shares of this company or ever operated or managed this company,” Sharma told The Indian Express. But the Mossack Fonseca files show Sharma was issued two shares on July 4, 2011 and was appointed director on February 2, 2012. The location of the Register of Shareholders is shown to be in Cyprus. A March 27, 2012 mail by Bermet Nogoev of Chesterfield to a Mossack Fonseca executive states, “On a separate note, Margarita Services Ltd is a new company that we purchased from you. I note that Mr Lokesh Sharma was appointed as shareholder on the day of incorporation 04.07.2011. However, the Director (the same gentleman) was appointed on the 08.02.2012. Could you please kindly explain the reason why this is.”
On Mardi Gras Holdings, another BVI company, Sharma said: “I have been complying with the relevant Indian laws and regulations concerning Mardi Gras Holdings. Income tax returns for the year ending 31 March 2016 are not due for filing yet. We will be in compliance with our obligations under relevant laws and rules, etc.” Sharma also said TCM Private Ltd had bought out Naynesh Desai’s shares in Peppermint Management Corp. “RBI was informed. We are in compliance with our obligations under relevant regulations,” he said.
Told that Mardi Gras Holdings sought to increase the capital by 1,450,000 shares in August 2015, Sharma said, “This pertains to internal discussion over email and was never acted upon and hence had never come into public domain. This has raised grave concerns to both me and the administrator of the company as someone has gained improper access to our emails. We can understand your access to information relating to the constitution and actions of our companies as we are in any case sharing relevant details with the concerned Indian authorities. But access to private and confidential correspondence has surely caused us concern as this can potentially damage and undermine our business pursuits and interests. I hope you can understand my concerns. We will seek your cooperation when we choose to pursue this matter.”