Kochi: A huge new leak of financial documents has revealed how the powerful and ultra-wealthy, including many Indian politicians, corporate persons and Bollywood stars, secretly invest vast amounts of cash in offshore tax havens.
What are the Paradise Papers?
The Paradise Papers refers to a leak of 13.4 million financial documents, that expose the global environments in which tax abuses can thrive, and the complex and seemingly artificial ways the wealthiest corporations can legally protect their wealth.
Where do they come from?
The majority of the documents are related to a law firm and corporate services provider that operated together in 10 countries under the name 'Appleby'. Last year, the "fiduciary" arm of the business was the subject of a management buyout and it is now called 'Estera'. A smaller amount comes from the Singapore-based international trust and corporate services provider, 'Asiaciti Trust'.
The reports also claimed that the files also have details from 19 corporate registries maintained by governments in secrecy jurisdictions, which are Antigua and Barbuda, Aruba, the Bahamas, Barbados, Bermuda, the Cayman Islands, the Cook Islands, Dominica, Grenada, Labuan, Lebanon, Malta, the Marshall Islands, St Kitts and Nevis, St Lucia, St Vincent, Samoa, Trinidad and Tobago, and Vanuatu. The papers cover the period from 1950 to 2016.
Who leaks the files?
The material, which has come from two offshore service providers and the company registries of 19 tax havens, was obtained by the German newspaper Süddeutsche Zeitung and shared by the International Consortium of Investigative Journalists (ICIJ) with 100 other media organizations, including the Guardian, the BBC and The New York Times. It took more than 380 journalists, spending a year combing through data that stretches back 70 years, to process the information in these files. The US-based ICIJ was behind the Panama Papers made public last year.
Why 'Paradise Papers'?
The BBC says that the name was chosen "because of the idyllic profiles of many of the offshore jurisdictions." The title was derived from the French term for a tax haven - 'paradis fiscal'.
What is 'offshore finance'?
Offshore finance is about a place outside of one's own nation's regulations to which companies or individuals can reroute money, assets or profits to take advantage of lower taxes, reports the BBC. These jurisdictions are known as tax havens to the layman, or the more stately offshore financial centers (OFCs) to the industry. They are generally stable, secretive and reliable, often small islands but not exclusively so, and can vary on how rigorously they carry out checks on wrongdoing. However, according to ICIJ, offshore investments are not necessarily illegal.
What is 'Appleby'?
Appleby is an offshore law firm based in Bermuda. It also operates in British Virgin Islands, Cayman Islands, Guernsey, Hong Kong, Isle of Man, Jersey, Mauritius, Seychelles and Shanghai. The 'Appleby' helps corporations, financial institutions and individuals set up and register companies in offshore jurisdictions.
What is Appleby's response?
The firm has denied any wrongdoing, either by itself or by any of its clients.
Who is being exposed?
According to reports, the Paradise Papers have exposed financial affairs of hundreds of politicians, multinationals, celebrities and high-profile individuals, including many Indians. The papers also throw light on the legal firms, financial institutions and accountants working in the sector and on the jurisdictions that adopt offshore tax rules to attract money.
Why Paradise Papers matter?
The Paradise Papers reveal tracks of veiled offshore financial activities. This will help the regulators to study the how the wealthy and powerful people around the world protect their wealth evading tax. It is expected to show some light to the malpractices carried out through complex financial structures and offshore shell companies. This may not affect the life of the common man. However, in long run, this will help governments around the world to better tax structures and laws, while regulators can investigate tax evasion by these parties.
(With inputs from agencies)