Politicians, business leaders among prominent figures linked to tax haven activity.
Two members of India’s Parliament, the world’s largest producer of cut roses and other major business owners are among hundreds from the subcontinent linked to offshore companies revealed in files obtained by the International Consortium of Investigative Journalists (ICIJ).
After The Indian Express published the revelations of dealings in countries commonly used as tax havens, Finance Minister P. Chidambaram announced an investigation. “We have taken note of the names,” he said at a press conference, “and inquiries have been put in motion."
The disclosure also shines new light on characters caught up in two local scandals that have been likened to Watergate and Enron.
The list of offshore owners includes Ravikant Ruia, who in December 2011 was accused of criminal conspiracy by India's principal anti-corruption enforcement agency, the Central Bureau of Investigation.
The accusation relates to a scam that involved politicians and government officials illegally undercharging telephone companies by billions of dollars for cell phone frequencies.
Time magazine listed the scam at number two on its 2011 “Top 10 Abuses of Power” list, just behind the Watergate scandal that brought down U.S. president Richard Nixon.
Ruia, whose firm is disputing the charges made against him and others, is a member of India's fourth richest family. He is vice-chair of Essar Group, a multinational conglomerate that has interests in steel, oil and gas, and power generation, among other things.
The documents obtained by ICIJ show he has three firms in the British Virgin Islands (BVI). His daughter, Smiti, is a shareholder in two of them. One of Ruia's flagship companies, Essar Power, has further BVI entities that are named in the ICIJ documents.
A company spokesman said that of the eight companies registered in Ruia’s name as well as in the name of Essar Power, five have since been liquidated. Three continue to be operational.
“These companies were started as SPV's to make investments and are in the knowledge of the authorities concerned,” the spokesman added.
Another owner of BVI companies is Teja Raju Byrraju. He is the eldest son of Ramalinga Raju, the former chairman of Satyam Computers, who was jailed in a fraud case that has been called India’s Enron.
Satyam Computers is one of India’s largest technology outsourcing companies and investigators looking into the fraud found a maze of about 300 Indian companies related to Ramalinga Raju that were used to siphon off as much as $1 billion.
Ramalinga Raju spent 32 months in jail for falsifying the accounts of Satyam Computers before he was granted bail in November 2011. The case against him is proceeding and authorities have frozen some of his assets.
The documents obtained by ICIJ appear to show that the son, Teja Raju, registered two BVI companies in 2007, Global Network Overseas and Stapley Universal Limited. Their purpose is unclear. Raju however disputed the accuracy of the documents, saying it “looks like a case of mistaken identity.”
Another prominent Indian on the ICIJ list is Vijay Mallya, an elected member of the upper house of India’s parliament. A flamboyant billionaire and liquor baron, he is known for his lavish lifestyle and is sometimes referred to as India’s Richard Branson.
Mallya is currently struggling to save his debt-ridden Kingfisher Airlines. The airline recently lost its license to fly and Indian tax authorities have served Mallya notices for failing to deposit taxes deducted from his employees’ pay.
The documents obtained by ICIJ show Mallya linked to a company called Venture New Holding Limited that was registered in the BVI in 2006.
A spokesman for Mallya stated: “Dr. Mallya is a non-resident Indian with business activities in different parts of the world. It is common practice to use BVI registered companies in connection with such activities which are not confined to India alone. All disclosures in regard to Dr. Mallya's wealth have been duly made to Parliament.'”
Another member of Parliament that appears to be listed in the ICIJ documents is Vivekanand Gaddam, a member of the ruling Congress Party. Gaddam is also vice-chairman of Visaka Industries, which produces about one quarter of India's asbestos needs.
Gaddam and his wife Saroja are listed as directors and shareholders of a BVI company called Belrose Universal Limited, which was incorporated in September 2008.
But Gaddam said the documents were wrong and he was not associated with the company. “I do not remember being involved with such a company and have no connection with it,” he said.
Another on the list is textile and fertilizer tycoon Abhey Kumar Oswal.
The documents appear to show that Oswal registered 11 companies in Samoa and the BVI, beginning in 2006, and that he controlled them through a trust called Rising Wealth Trust, registered in the Cook Islands. Oswal also disputed the accuracy of the documents.
“I have not registered any offshore firms. You must be in the knowledge of business entities of my son, Shael Oswal, who is a Singapore resident and a NRI [non-resident Indian]. My companies or myself have no relation whatsoever with his business or business entities.”
The world’s largest producer of cut roses, Sai Ramakrishna Karuturi, also appears in the documents. He and his wife Anitha appear to have registered six BVI companies in 2007. Reached in Ethiopia he said he did not recall setting up any offshore companies and he did not respond to follow-up calls.
Also on the ICIJ list are two prominent Mumbai-based jewelers, Rashmi Kirtilal Mehta and his son Bhavin Mehta.
Father and son are shown as joint shareholders in a BVI company registered in 2004 called Bapaji Incorporated. Neither responded to questions sent to them in Belgium.
By co-incidence, one of their relatives, Praboth Mehta, another prominent business figure in India, was named in 2011 as one of 18 Indians who had bank accounts in the European tax haven of Liechtenstein. Those on the list later faced prosecution in India for tax evasion.
Another name on the Liechtenstein list was the late K M Mammen Mappillai, the founder of India’s leading tire manufacturer, MRF Tyres.
Members of Mappillai’s family and some top managers of MRF Tyres turn up in the ICIJ documents. The documents show a BVI company called Moon Mist Enterprise Limited.
Mappillai's two sons, MRF chairman Kandathil Mammen and its managing director Arun Mammen, along with Kandathil's son Rahul Mammen Mappillai, a MRF director, are shown as directors of the BVI firm. The family did not respond to calls for comment.