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The Pandora Papers: A Step-by-Step Guide to the Leak that Jolted the Whole World.
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The Pandora Papers: A Step-by-Step Guide to the Leak that Jolted the Whole World.

For months, more than 600 journalists from 117 countries combed through data from 14 sources’, uncovering tales that was published this week collectively called now as the Pandora Papers.

The information was collected by the International Consortium of Investigative Journalists (ICIJ) in Washington, DC, which has been working on its largest-ever worldwide investigation involving more than 140 media organisations.

What has been discovered thus far?

The Pandora Papers contain 6.4 million documents, almost three million pictures, over a million emails, and nearly half a million spreadsheets.

So far, the following stories have been revealed:

  • the owners of over 1,500 UK properties purchased through offshore companies, including those suspected of wrongdoing.
  • Qatar’s ruling family evaded £18.5 million in tax on a London super-mansion
  • a well-known Tory fundraiser who was embroiled in one of Europe’s largest corruption scandals.
  • Jordan’s King Hussein spent £70 million buying properties in the UK and the US through secretly-owned businesses.
  • The secret participation of Azerbaijan’s ruling family in property purchases worth more than £400 million in the United Kingdom.
  • The inability of the Czech prime minister to notify an offshore investment company used to acquire two £12 million French homes.
  • Kenyan President Uhuru Kenyatta’s family has been accused of secretly owning a network of offshore firms for decades.

The documents reveal how some of the world’s most influential people, including more than 330 lawmakers from 90 nations, hide their riches through hidden offshore corporations.

These people, according to Lakshmi Kumar of the US think tank Global Financial Integrity, “are able to funnel and syphon money away and hide it,” frequently via the use of anonymous businesses.

What exactly do we mean when we say “offshore”?

The Pandora Papers expose intricate cross-border networks of corporations, which often result in concealed ownership of money and assets.

Someone may possess a property in the United Kingdom, but it is owned through a network of businesses headquartered in other countries, or “offshore”

These are the nations or territories off the coast where:

  • It’s simple to start a business.
  • There are rules that make it difficult to identify the proprietors of businesses, and corporation taxes are minimal or non-existent.
  • The locations are sometimes referred to as tax havens or secrecy jurisdictions.

Although there is no comprehensive list of tax havens, the most well-known include British Overseas Territories like the Cayman Islands and the British Virgin Islands, as well as Switzerland and Singapore.

Is using a tax hideaway against the law?

People can lawfully avoid paying some taxes by transferring their money or forming corporations in tax havens, although this is often seen as immoral. Tax evasion, according to the UK government, “involves operating within the letter, but not the spirit, of the law”

There are also a variety of valid reasons why people would desire to keep their money and assets in various countries, such as to protect themselves from criminal assaults or to avoid regimes that are unstable.

Although it is not unlawful to have hidden offshore assets, establishing a sophisticated network of secret corporations to shift money and assets is the ideal approach to conceal illicit gains.

Following earlier disclosures such as the Panama Papers, there have been recurrent demands for politicians to make it more difficult to avoid paying taxes or hiding assets.

Mr. Ryle, on the other hand, claims that the Pandora Papers indicate that “The individuals who have the power to remove offshore secrecy are the ones who gain from it. As a result, they have no motivation to put a halt to it “.

Is it simple to hide money in a foreign country?

All you have to do is set up a shell corporation in one of the high-secrecy nations or jurisdictions. This is a corporation that simply exists in name, with no employees or a physical location.

However, it is not free. You pay a specialist business to set up and operate a shell company on your behalf. These companies might give an address as well as the names of paid directors, leaving no trace of who is really behind the business.

How much money is stashed away in offshore accounts?

It’s hard to say for sure, but the ICIJ reports that estimates have varied from $5.6 trillion to $32 trillion. According to the International Monetary Fund, tax havens cost governments around the world up to $600 billion in missed taxes each year.

It is harmful to the rest of society, according to Ms. Kumar: “The ability to hide money has a direct impact on your life… it affects your child’s access to education, access to health, access to a home.”

What’s India doing about it?

The Centre said on Monday that an inquiry into the list of persons who allegedly utilised worldwide tax havens to hide their assets from government scrutiny will be overseen by a “multi-agency group” led by the chairwoman of the Central Board of Direct Taxes.

The findings are based on approximately 1.19 crore secret papers from 14 offshore service businesses that reportedly set up shell corporations for customers wishing to keep their financial activities hidden, nicknamed the “Pandora Papers.”

“So far, only the names of a few Indians (both legal entities and individuals) have appeared in the media,” the Ministry of Finance said. “The names and other details of all the entities have yet to be released on the ICIJ [International Consortium of Investigative Journalists] website.”

The Indian government has stated that investigations into the instances will begin, and that necessary action would be taken.

“To ensure effective investigation in these cases, the government will also proactively engage with foreign jurisdictions for information on relevant taxpayers/entities,” the ministry stated.

What else was discovered during the investigation?

Pakistan Finance Minister Shaukat Tarin, Jordan’s King Abdullah II, and pop artist Shakira are among those accused of using tax havens throughout the world.

Offshore companies aren’t all unlawful. Tax evaders, fraudsters, and money launderers, on the other hand, typically prefer the confidentiality that tax havens provide.

Since 2013, the offshore sector has been shaken by a series of financial data breaches. The ‘Pandora Papers’ are the most recent and include the most data.

According to the reports, Reliance ADA Group chairman Anil Ambani and his agents control at least 18 offshore firms in Jersey, the British Virgin Islands, and Cyprus.

At least $1.3 billion was purportedly borrowed and invested by seven of these firms (about ₹9,649 crore).

Ambani, on the other hand, informed a London court in February 2020 that he was insolvent and had no assets. However, the court had raised concerns “about the extent to which Mr. Ambani has any offshore interests…”

He was ordered to pay $716 million (about ₹5,315 crore) to three Chinese banks by the court, but he did not comply.

The inquiry also discovered that Kunal Kashyap, the largest shareholder of investment bank Allegro Capital, is the “protector” of The Deanstone Trust, which was established in New Zealand by Mauritius-based firm Glentec International in 2015.

John McCallum Marshall Shaw, the husband of Biocon Executive Chairperson Kiran Mazumdar Shaw, is said to hold 99 percent of Glentec.

Allegro Capital and Kashyap were prohibited from trading in the stock market for a year by the Securities and Exchange Board of India on July 8 for insider trading in Biocon’s shares.

Kashyap provides a financial consulting business that both Biocon and Glentec have employed, according to the Biocon executive chairwoman. “Apart from Biocon, Mr. Kashyap advises a number of companies,” she explained. “I understand that Mr. Kashyap’s SEBI case is currently pending before the Securities Appellate Tribunal (SAT), so I will refrain from commenting further.”

Sachin Tendulkar and members of his family were Beneficial Owners of an offshore corporation that was dissolved in 2016, according to the Pandora Papers.

Saas International Limited, a business located in the British Virgin Islands, has designated the former cricketer, his wife Anjali, and his father-in-law Anand Mehta as Beneficiary Owners and Directors. Three months after the Panama Papers revelations, the firm was apparently dissolved.

The investment was legal, according to Mrinmoy Mukherjee, director of the Sachin Tendulkar Foundation, and was disclosed in the former cricketer’s income tax reports. He stated categorically that he would not engage in money laundering or tax avoidance.

“Mr. Tendulkar made the referenced investment from his tax-paid funds under the Liberalised Remittance Scheme (LRS) and has duly accounted for and declared in his tax returns,” Mukherjee added.

The figure of ₹60 crore mentioned in the inquiry, according to Mukherjee, is “grossly incorrect.” “However, all amounts received by Mr. Tendulkar on the liquidation of the investment have also been declared in his tax returns,” the Sachin Tendulkar Foundation’s director stated.

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