The Panama Papers: Narendra Modi steps in; I-T, RBI panel to probe offshore money trail

By: | Updated: April 5, 2016 12:45 AM

ANNOUNCING it was acting on the directions of the Prime Minister, the government said Monday it was constituting a special multi-agency group to look into all cases of Indians setting up offshore entities in tax havens after The Indian Express published the first set of names as part of its ongoing investigation in The Panama Papers.

ANNOUNCING it was acting on the directions of the Prime Minister, the government said Monday it was constituting a special multi-agency group to look into all cases of Indians setting up offshore entities in tax havens after The Indian Express published the first set of names as part of its ongoing investigation in The Panama Papers.

Welcoming the information brought out by “any investigative journalism”, the Finance Ministry, in a statement, said the group, comprising officers from the investigative unit of the Central Board of Direct Taxes (CBDT) and its Foreign Tax and Tax Research division, the Financial Intelligence Unit (FIU) and the Reserve Bank of India (RBI), will monitor the flow of information in each case.

“The government is committed to detecting and preventing generation of black money. In this context, the expose of Panama Papers will further help the government in meeting this objective…The government will take all necessary actions as required to get maximum information from all sources including from foreign governments to help in the investigation process,” the Ministry said.

“India is also concerned that there are countries in the world which are being used as tax havens because of which all other countries of the world suffer loss of tax. The recent initiative of Base Erosion and Profit Shifting (BEPS) will help India and other countries in checking this practice of tax-avoidance through such tax havens. India is also fully committed to the BEPS initiative,” it stated.

The Panama Papers are more than 11 million documents from the secret files of Mossack Fonseca, a law firm headquartered in tax haven Panama, known for its factory-like production of offshore companies for its worldwide clientele of the well-heeled.

These records reveal a list of individuals who have paid the firm — and bought the benefits of the secretive, lax regulatory system in which it operates — to set up offshore entities in tax havens around the world. And Mossack Fonseca’s eagerness to meet their demands, each one for a fee, that helps mask real ownership but still show compliance.

The records were accessed by Munich-based newspaper Suddeutsche Zeitung which a year ago collaborated with the International Consortium of Investigative Journalists (ICIJ) and, in turn, with over 100 media organisations, including The Indian Express, to investigate its contents.

Incidentally, the Finance Ministry statement also referred to the “Offshore Leaks”, published by The Indian Express in 2013: “In the past also, based on the investigative journalism of ICIJ in 2013 in which the links of 700 Indian persons were shown to have business connection with offshore entities, the Revenue Department, Ministry of Finance, Government of India has been able to identify 434 persons out of them as Indian residents. 184 persons out of these have also admitted their relationship with such off-shore entities/transactions.”

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