Paradise Papers: The Story of the Black Money Continues

The world is full of strange coincidences. One such coincidence - with just two days to go for Indian government’s observance of Anti-Black Money Day on November 8th - is the release of Paradise papers.

The Paradise Papers, or the leaked file of an offshore law firm Appleby, reveal the hidden offshore wealth and transactions of multinational corporations like Apple, Facebook, Twitter, Nike etc, of individuals including the British queen, influential politicians of all colours, hues and countries, film actors and rock stars.

The Paradise Papers also show how, India’s own robbing hood, Mr Vijay Mallya, has syphoned off $1.5 billion or nearly Rs. 10 thousand crores into various offshore subsidiaries of his company United Spirited Ltd. This is also close to the worth of loans that Mr. Mallya has taken from Indian banks and defaulted on.

Also figure in the Paradise Papers, the names of Indian corporations like GM group, Jindal Steel, Emaar MGF, Videocon, Apollo Tyres, Havell, Religare etc. Incidentally, many of these companies like Videocon, GMR and Jindal group owe a great deal of money to the Indian public sector banks, which have turned in to bad loans.

Many of these corporates, with the help of Appleby, the law firm at the centre of the paradise papers, have opened multiple shadow companies based in tax havens like Bermuda, British Virgin Islands, Cayman Islands etc., probably to divert funds and evade taxes from India.

714 Indian names have appeared in Paradise Papers, among who is the current Minister of State for Civil Aviation, Jayant Sinha, and Virappa Moiley, a minister in the previous UPA government.

More than anything, what the Paradise Papers reveal, is the manner in which corporates and rich people were allowed by the governments to build a corporate veil over their wealth transactions. This corporate veil allowed the rich to divert wealth, evade taxes, increase their influence and syphon off public money from the banking sector – often in a legal and sometimes semi-legal fashion.

The Paradise papers are not the first of its kind. There were Panama Papers before this, in which figured the name of a Mr Adani. Even before that was the Swiss leaks, in which the names of both the Ambani brothers have figured.

And who can forget the recent scandal related to the DRI’s investigations into two of Mr Adani’s companies, where the DRI’s investigators alleged that Mr Adani has diverted Rs. 1,500 crores to a Dubai based front company, through over-invoicing of power equipment bought by his power companies. It so happens that these two power companies are also heavily indebted to the Indian public sector banks.

Despite so many leaks and leads, all of which have been brought in to the open by the media during the tenure of Mr Modi – there has been no action from the BJP government. Not a single step has been taken to discipline the rich or the corporates.

Instead, there have been many a bravura performance by Mr Modi, in front of the Indian audiences and abroad, on his determination to weed out corruption and wipe out black money. But so far, all those promises have amounted to one hare-brained scheme after the other. First demonetisation and then the introduction of GST.

How is the GST going to prevent tax evasions by the big corporates, only Mr Modi and Mr Jaitley knew? If we go by the warm welcome GST received from the big corporates, it is definitely not going to harm their capacities for tax evasions.

With demonetisation, Which was supposed to reveal all the black money in India, which according to the Prime Minister was hidden as cash under mattresses. Mr Modi, stuck to this script of cash being the enemy, when all the revelations - the Swiss leaks, the Panama Papers, the DRI’s investigation in to Adani’s companies and the Paradise papers now, pointed out to the fact that a lot of the black money is not held under mattresses but is diverted to offshore accounts in tax havens. It is well known that big corporates bring the money stashed offshore back as foreign investment into their own companies, or through participatory notes where the names of the investors can be kept secret and other such schemes.

Mr Modi, cleverly set up the straw man of cash and set about defeating it, while the flow of black money out of India and the recirculation of it back to the country as white money still continues.

It is estimated Rs. 11 lakh crores of Indian black money is stashed away in offshore accounts. If the BJP government does bring back this wealth, then it will have enough money to provide rural employment through MNREGA for next 23 years, finance Aaganwadis for children through ICDS for next 55 years, and finance National Rural Health Mission (NRHM) for half a decade and more.

But here comes the big question – Is the government really interested in tackling black money? After demonetisation and government’s refusal to acknowledge its failure, one has little cause for optimism of this count.

So, for now, the story of black money continues.