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FIRE AND FLOODS HELP TAX EVADERS

Akhilesh Bhargava

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It has been a well known fact that for many decades, Indians have secretly stashed their black money is overseas tax havens like Switzerland, Liechtenstein, Bahamas, London, British Virgin Islands (BVI) etc. Such illegal parking of funds abroad, in violation of India’s tax and foreign exchange laws, has been a favourite tax evasion practice, of the rich and famous, who have tonnes of such ill gotten gains and can thus engage the smartest of consultants to hide their black money in secret accounts and assets abroad. This entire tax evasion industry is shrouded in stealth and secrecy, because that is how it benefits all involved, whether it be the tax evader, or his advisor, his banker and certainly the country where he chooses to park his illegal booties. Such illicit wealth fosters the prosperity of tax havens, which explains the prosperity of nations like Switzerland etc.

It is only when a disgruntled employee of a bank, as in the case of HSBC Geneva, or where the ethical hackers choose to break into the database of any one of these agencies, as in the case of Paradise Papers and the Panama Paper leaks, that authentic information about such tax evaders and their hidden assets abroad is revealed and helps the tax authorities of countries like India, to investigate such cases and to tax, penalise/prosecute these tax evaders, who are invariably the rich and famous as in the case of the Bachhan family, who were found to have hidden assets routed through Panama.

India often receives information about Indians having undisclosed black money assets/income abroad. But such information is of little use and cannot be enforced in Indian courts, unless it is supported with credible and cogent evidence, to prove such a case against a tax evader. Mere suspicion/unproven information makes no headway in nabbing a tax evader and that needs the support of the government of the respective tax haven to share data/documents with India. For the most obvious reasons, these tax havens, until a decade ago, used to refuse to share any such data, citing excuses such as banking secrecy etc. It is due to the constant aggressive persuasion of India, that now almost a hundred nations share such information with India, not just about past black money transactions, but also about current transactions, on a real time basis.

The sharing of such information with India, related to any past transactions is a tedious process and takes about 9-12 months, before it is handed over to India. The British Virgin Islands, a tax haven in the Carribean, have been a favourite territory for Indians to secretly stash their black money. A number to tax evasion cases related to undisclosed foreign accounts of Indians have pertained to BVI and the Indian tax authorities continuously seek data/documents/evidence from the BVI. It is reported that numerous high profile cases of tax evasion, have been under discussion between India and the BVI, with the former seeking data/documents. Interestingly, the BVI authorities have informed India that it is now unable to share information on tax evasion, since the data has got destroyed in floods in August 2017 and files have been lost. The direct beneficiaries of this ‘natural calamity’ are the tax evaders amongst India’s rich and famous. Such a response from the BVI is difficult to believe and reminds one of mysterious fire last year, that destroyed the Scindia house building at Mumbai, (which head quartered the investigation wing of the Income tax Department), and all the sensitive/incriminating data/documents therein. Earlier it was the authorities that protected the tax evaders, and now curiously calamities do that, whether it be floods or fire.

Business Tit-Bits

The insider of the Monetary Policy Committee meeting of the RBI

Akhilesh Bhargava

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The recent meeting of the Monetary Policy Committee of the Reserve Bank, took place with a much better macro economic environment. Crude oil prices have fallen sharply, the rupee has started gaining strength, capital inflows are increasing, there is a pick up in investment activity led by the government, there is an increase in capacity utilisation, a rise in exports, an improvement in credit off take, inflation remains subdued and with a retreat in commodity prices, corporate profits should look upwards. What happened in the meeting? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter.

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An insider into the murky affairs of the Sun Pharma

Anusha Bhattacharya

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Among the large corporates in India, Sun Pharmaceuticals Ltd., India’s biggest pharma company, stood out as a relatively clean organisation, whose grounded/down to earth billionaire promoter Dilip Shanghvi was richer than even Mukesh Ambani, though for a brief period, in 2015. Sun Pharma and its promoters were often awarded and feted for their industry leadership and business acumen, and were also respected for their business integrity. But there’s more to it. Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares the complete story of the murky affairs of Sun Pharma

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Why is audit India’s weak link?

Akhilesh Bhargava

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In an interesting and candid recent speech on corporate governance in India, Uday Kotakspoke about what ails corporate governance in India. He said that there are six layers of corporate governance in our system, including the company management, its board of directors, rating agencies, auditors and regulators. He remarked that of late, these six layers have not been doing their job and that, their performance has not been satisfactory. He lamented that auditors are one of the weakest links plaguing this corporate governance architecture in India. Why is it that the audit is India’s weak link? Mr. Akhilesh Bhargava, Business Editor of HW Business and Finance shares his insights on the matter.

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