Citizens' Issues
Panama Papers and What They Mean to India
The biggest ever leak is a bit of a damp squib about India; but that is precisely why it may be an opportunity for putting ground rules in place to stop tax evasion
 
Edward Snowdon said it well when he tweeted, the “Biggest leak in the history of data journalism just went live, and it’s about corruption.” The whopping 11.5 million files of the Panama-based law firm, Mossack Fonseca & Co, investigated for almost a year by the International Consortium of Investigative Journalists (ICIJ)—a global alliance of newspapers and investigative journalists—released simultaneously around the world on 4th April is, indeed, an explosive new development in the history of media and journalism. Revealing the names of so many global political leaders, celebrities, sports stars and businessmen, has the potential to force countries around the world to rewrite tax polices and stop the super-rich from evading taxes and also to rationalise taxes for disincentivising evasion. 
 
Think about it. In a highly competitive media world, every single media organisation has been forced to report and reproduce the findings of news and television companies that were part of the alliance, with due acknowledgement. This is an immense credibility boost for the media and for investigative journalism at a time when advertising had been dictating ‘breaking news’ on TV and all that is fit to print. 
 
At the time of writing, the Panama Papers had already snagged one major political scalp—that of the Prime Minister of Iceland. Other global leaders will face serious political repercussions in the days to come. Ironically enough, the leak has also nailed the Chilean branch head of Transparency International (TI), forcing him to resign. TI, a Germany-based NGO publishes a global corruption index, in which India figures somewhere near the bottom of the heap. And, yet, when it comes to India, the Panama Papers have been a damp squib. 
 
A handful of industrialists, a couple of movie stars, a deceased mafia-type and someone who says he has $100 in his son-in-law’s company are among the Indian names that made headlines on the day of the big-bang global release. It will be hard to find any Indian who believes that our politicians do not have a fat stash of funds abroad; they were probably fortunate to patronise a different tax haven and law firm. 
 
Apart from the Prime Minister of Iceland, the Panama Papers reveal offshore accounts and companies of British Prime Minister David Cameron’s late father, several Tory MPs, Russian Vladimir Putin (transactions worth $2 billon, albeit through a childhood friend Sergei Roldugin), links to China’s powerful Politburo members, President Xi Jinping and former Premier Li Peng through their kin, the Presidents of Pakistan, Argentina and Ukraine, the President and Prime Minister of Azerbaijan and the King of Saudi Arabia. Yet, not a single heavyweight Indian politician, or even a small-time one, figures in the revelations.  
 
As hard as this is to comprehend, it is probably the best thing to have happened. It allowed the government to react quickly and decisively. Finance minister Arun Jaitley’s move to set up a multidisciplinary committee (comprising the RBI, central board of direct taxes and financial intelligence unit of the finance ministry but not the enforcement directorate or the directorate of revenue intelligence) to investigate the Panama Papers was among the fastest reactions to the leak by any country. Even the US Department of Justice had only said that it is studying the papers. 
 
Also, contrast the government’s swift reaction this time with how the Congress-led United Progressive Alliance responded to Germany’s offer to share information on tax-evaders. In February 2008, the German authorities had bought information about illegal money stashed away by citizens of various countries in LGT, a Liechtenstein bank. The list contained the names of 1,400 clients of whom 600 were Germans. A spokesman for the German finance ministry, Thorstein Albig, had said in March 2008 that information on the other accounts would be shared with other countries for free. Finland, Sweden, and Norway quickly obtained the data, but the UPA government did not wish to have anything to do with it. Only after much prodding by the Opposition did it ask for the list in late-2008.
 
A multi-disciplinary committee comprising officers who are senior enough is the only way to ensure an investigation that is not marred by investigative agencies working at cross-purposes or indulging in mindless one-upmanship and undermining one another’s efforts. It also reduces the chances of information being compromised by corrupt officers. In 1992, in the aftermath of the Harshad Mehta scam, such an inter-disciplinary committee headed by R Janakiraman produced excellent and detailed fact-finding reports. In fact, the Joint Parliamentary Committee (JPC) set up after the Ketan Parekh scam of 2000-01 pointedly recorded the view that it “did not have the benefit of a report on the lines of the Janakiraman Committee Report which was made available to the previous JPC on the scam in securities and banking transactions. Reliable evidence was difficult to find and took much time to cull.” (para 2.18). A multi-disciplinary committee lends credibility to the government’s action. This time, the fact that the Supreme Court-appointed special investigation team (SIT) on black money headed by Justice (retired) MB Shah has already announced its intention of investigating the list ‘thoroughly’. This will further keep the government-appointed committee on its toes. 
 
However, I must mention that the Janakiraman committee’s hard work did not lead to faster filing of charge-sheets by the Central Bureau of Investigation (CBI) and the cases continue to drag through the courts for nearly 25 years. Hopefully, there will be pressure to address this issue with the SC-appointed SIT watching the action. The Reserve Bank of India (RBI) governor injected the necessary sobriety into the investigation process by saying,  “there could be genuine reasons for having offshore accounts” and the multidisciplinary committee (of which RBI is a part) will probe the legitimacy of the offshore accounts. It is important to do this without a needless witchhunt, because several of those named by The Indian Express reports have emphatically claimed that they have legitimate accounts whose transactions have been disclosed in their tax filings. RBI’s Liberalised Remittance Scheme (LRS) has permitted resident Indians, including minors, to freely remit funds overseas for permissible current or capital account transactions or both. The sum that is allowed to be invested overseas has increased from $25,000 in 2004 to as much as $250,000 since then; the remittances could easily have been routed through tax havens which permit extraordinary ease of transactions. 
 
The multi-disciplinary committee will, at some point, come up with its report; but, all said and done, India’s political class has nothing to fear from this particular leak. What will worry them, though, is that the Panama Papers may just be the beginning of a new trend—of hacking and leaking information available with top tax lawyers. The big message from Wikileaks, Edward Snowden’s disclosures and the Panama Papers, to politicians and the super-rich is that nothing is secret anymore; every database can be hacked sometime and the disclosures can ruin political careers.
 
If world leaders, including those in India, react to the Panama Papers by implementing sensible tax policies that make it unattractive to evade taxes by routing them through expensive offshore structures, that would be the most positive outcome of this path-breaking journalistic exercise. But that is a utopian expectation so long as tax havens are useful in routing illicit funds to terrorist groups and to finance insurgencies or the machinations of spy agencies of powerful nations.
 
Correction: Corrected for adding proper designation as Prime Minister of Iceland instead of the President.
 

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COMMENTS

MG Warrier

8 months ago

Copied below is an extract from my moneylife.in article "Cobra Post Exposure: What next?" published here on May 20, 2013:
"The question arises, in 2013, do we need a Cobrapost, a Tehelka, Wiki-leaks or a new TV channel struggling to improve its own TRP to tell us that all is not well in the goings on in India, when it comes to handling public funds (“public funds” comprise money collected from public which includes bank/company deposits and other funds with private organisations)? After all, this much has been told to us by the highest court (Supreme Court of India), Comptroller and Auditor General, Election Commission and several other “usually reliable” government and private bodies, from time to time in recent years. Most of the political parties also have endorsed this view during their bickering among them. What the common man is waiting for is a change which will reduce corrupt practices and infuse a semblance of ethical behaviour, on the part of individuals and organisations handling public funds, on which, in reality, they have only trusteeship rights.

While delivering the Second Annual Lecture at Transparency International in Delhi on 19 February 2011, Dr Bimal Jalan, ex-governor, Reserve Bank of India made the following observation:
“Thus, taken as a whole, corruption is undoubtedly an important cause for rising disparity, persistence of high incidence of poverty, and enormous delays and low productivity of public investments in India.”

On an earlier occasion (Seventh Nurul Matin Memorial Lecture, Bangladesh Institute of Bank Management, Dhaka, 2007) speaking on “Ethics in Banking” Dr Jalan had this to say: “Adherence to the ‘Rule of Law’ in a democratic society is an essential minimum requirement of ethical behaviour” He agreed with Professor Nurul Islam who had observed on the same dais that “…..ethics in banking, economic transactions and in society in general, are all interrelated. The solution needs to cover all related areas, including the systematic political factors.”

Remembered the above, in the context that deterioration in ethical behaviour is not confined to financial sector alone. I genuinely feel, we need all voices which bring to surface unethical practices including corrupt behaviour on the part of “public servants”. More importantly, media should help citizens to follow up such cases until the guilty meet with exemplary punishment."

Mahesh S Bhatt

8 months ago

Minimum taxes maximum governance.

But here maximum tax maximum avoidance.

Could we reduce defence/public expenditures every thing justs bloats till breakdown bankrupcy.

Man always finds ways to manipulate.when Ministers also match fix with JPC's USA also /UK also everywhere Leaders are brokers & traders of National Assets sales/restructures.

Reduce laws/delete laws/taxes/introduce political accountabilty/

Remove that which donot get implemented as per expectations in 1-3 years & see things working in law itself.

Law & Justice are State instruments of trade & business


Mahesh bhatt

S.S.A.Zaidi

8 months ago

Struggle for more transparency on beneficial ownership. PEPs irrespective of whether domestic or Foreign should be categorized very very high risk and perhaps financial institutions may start de risking the accounts wherein PEPs involved-(though may b a difficult task)
Separating the legitimate transactions from the illegitimate ones may also b a hard exercise (RBI Gov ,s assertion that transactions routed thru Tax Heaven may not necessarily mean transactions are illegal)
Panama Papers are eyeopeners

Chandragupta Acharya

8 months ago

If media reports are anything to by, the performance of the Black Money SIT is disappointing. The Terms of Reference of the SIT task it with “investigation and prosecution” of all such black money holders who hold illegal money abroad, and makes a special reference of Hassan Ali. Instead the SIT seems to be only making periodic “recommendations”, and Hassan Ali has apparently been bailed out. What the SIT has achieved beyond the HSBC & Liechtenstein lists (which were already leaked) is not clear. The outcomes from the multi-disciplinary committee will mostly be similar – a set of recommendations, which we don’t need.

Admittedly, it is virtually impossible for anyone to actually bring back money that has already left the shores. Therefore, I am glad you mention “sensible tax policies” as the most ideal solution for this whole problem. Ultimately, there is no alternative to a real “minimum government”. Reducing government spending can automatically reduce taxes and do away with the motive to stash money in tax havens.

Unfortunately, the actual effect of disclosures such as the Panama Papers is usually the opposite – an even closer scrutiny (and even witch hunt) of the wealthy, leading to even more of them fleeing the system. That is what we are doing, in India as well. The new Tax Return forms for those earning more than Rs. 50 lacs p.a., higher income tax for Rs. 1 crore and above, increased PAN disclosures for high value transactions, tax on dividend above Rs. 10 lacs etc. only help in smothering the wealthy and driving them away to more friendly jurisdictions.

Chandragupta Acharya

8 months ago

If media reports are anything to by, the performance of the Black Money SIT is disappointing. The Terms of Reference of the SIT task it with “investigation and prosecution” of all such black money holders who hold illegal money abroad, and makes a special reference of Hassan Ali. Instead the SIT seems to be only making periodic “recommendations”, and Hassan Ali has apparently been bailed out. What the SIT has achieved beyond the HSBC & Liechtenstein lists (which were already leaked) is not clear. The outcomes from the multi-disciplinary committee will mostly be similar – a set of recommendations, which we don’t need.

Admittedly, it is virtually impossible for anyone to actually bring back money that has already left the shores. Therefore, I am glad you mention “sensible tax policies” as the most ideal solution for this whole problem. Ultimately, there is no alternative to a real “minimum government”. Reducing government spending can automatically reduce taxes and do away with the motive to stash money in tax havens.

Unfortunately, the actual effect of disclosures such as the Panama Papers is usually the opposite – an even closer scrutiny (and even witch hunt) of the wealthy, leading to even more of them fleeing the system. That is what we are doing, in India as well. The new Tax Return forms for those earning more than Rs. 50 lacs p.a., higher income tax for Rs. 1 crore and above, increased PAN disclosures for high value transactions, tax on dividend above Rs. 10 lacs etc. only help in smothering the wealthy and driving them away to more friendly jurisdictions.

Hemant Chitale

8 months ago

It was the Prime Minister (not the President) of Iceland.

MG Warrier

8 months ago

There could be motives beyond tax evasion behind keeping huge balances in 'secret' accounts abroad. If there is political will, there would be ways to unearth the motives and then handle individual account-holders. Without belittling the magnitude of the current revelation, one is tempted to say that it has never been 'lack of information' that has been preventing pursuit of black money.

ARUL KUMAR

8 months ago

What Mr. Ram Jethmalani is doing now? He can suggest right actions.

Tale of an untapped $13 bn waste management industry

Entrepreneurs are now urgng the government to franchise the 'fragmented' waste management industry and give it industrial status, so as to explore the sector in an organised manner

 

Between an India which produces 62 million tonnes of solid waste every year and a 'Swachh Bharat' is an untapped waste management industry which has the potential to be worth $13 billion by 2025, according to business organisations dealing in waste management research.
 
Entrepreneurs are now urgng the government to franchise the 'fragmented' waste management industry and give it industrial status, so as to explore the sector in an organised manner.
 
"Indian waste has big business potential; it's all set to become a $13 billion industry by 2025," Ritu Marya of Franchise India, a franchise solution company, told IANS.
 
"Swachh Bharat is a great initiative, but there are not enough businesses to back it up. At present, businesses are fragmented. They are either startups or SMEs, very few corporates and largely coming from overseas. That is not exactly an industry.
 
"A sector becomes an industry when professionalism and big funding comes, partnership happens at very large levels. That's what we are trying to do, to put all these fragments together and make it one large industry," Marya said.
 
Prime Minister Narendra Modi "means business, but I think Modi has put a lot on his platter, and business needs execution. Social enterprises are great but unless they make profit, they can't sustain for a very long time".
 
Franchise India along with SingEx, a Singaporean investment company exploring business opportunities with Indian waste, held a 'Clean & Green India' conclave here, where businesses chalked out the importance of an 'army of waste managers' to achieve success in the Swachh Bharat Abhiyan.
 
Indian waste management is governed by various legislation rolled out by the Ministry of Environment, Forests and Climate Change in association with state pollution control boards, state governments and municipalities.
 
Official figures say around 62 million tonnes of solid waste is produced in the country every year -- of which only 43 million tonnes is collected, only 12 million tonnes treated and the rest dumped.
 
This figure is expected to rise to 436 million tonnes by 2050.
 
Around 4.5 million tonnes is hazardous waste that includes bio-medical waste. Three million tonnes in plastic and 3.2 million tonnes of e-waste is generated annually in India.
 
As per another survey by business research organisation NOVONOUS, the waste management market is expected to be worth $13.62 billion by 2025, with an annual growth rate of 7.17 percent.
 
The e-waste management market, which is regularised compared to other solid waste, is expected to grow at 10.03 percent and the bio-medical waste management market is expected to grow at 8.41 percent during the same period.
 
As per the Ministry of Labour and Employment, the e-waste market is expected to grow at 30.6 percent during 2014-19.
 
"Given the size of India and the amount of garbage that we have, it could be even a $100 billion industry by 2020, provided we build the business around Swachh Bharat. Right now, it's just built on rhetoric. I have not seen any government official coming out and giving a business vision to Swachh Bharat," said a waste manager.
 
B.K. Soni of Eco Recycling Ltd. (Ecoreco), India's first professional e-waste management company, says 50 percent of expensive e-waste goes out of India every year to extract gold, silver, platinum and other expensive materials out of it.
 
"It is sold back to India at 50 percent higher rates," he says.
 
"Around 39 million people -- around three percent of India's population -- are involved in manual scavenging, e-waste or other waste management. Those working in this fragmented industry have a life expectancy of 45 years and 30 percent of their income goes towards medicine," he said.
 
"The government should at least work to give waste management an industry status," says Marya.
 
"Once it becomes that, everything that's working individually or at NGO level would come under one roof. Then things get regularised, people want to do jobs together. Today no one wants to work in waste management because there is lack of professionalism," she says.
 
The environment ministry on April 5, 2016, had announced regularisation of manual scavengers, but it did not answer the question on how to implement it.
 
"Given an industrial status, rag-pickers would get a blue collar job. It's important to uplift them by making them more professional," she adds.
 
Ravi Agarwal of Toxics Link, a Delhi-based group of philanthropists, says there is a huge opportunity in waste management and a lot of work is required to make it an industry.
 
But things are not clear as waste management happens at the local government or municipal level, which he says is incapable to handle the present recycling requirements.
 
"Municipality is the main stakeholder and it needs to open up. It requires well-defined hand holding, collection mechanism and revenue generation. Waste management is a completely untapped industry or rather an opportunity," he said.
 
"The environment ministry has done a good job, but the problem is with its implementation. Political initiatives like Swachh Bharat helps, because it keeps the ball rolling. But to actually implement it effectively, we need to go one step further," he adds.
 
Ministry officials, however, say waste management is already working as an industry at the local level.
 
"A part of the waste management market is already working as an industry, like e-waste or hazardous waste management. We make legislation and the state governments, pollution control boards and municipalities apply it. There are initiatives already going on.
 
"If demands like giving waste management an industrial status are coming up, then perhaps business houses or entrepreneurs are expecting support from the government like loans or land allotments. We are looking into it," an environment ministry official told IANS.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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COMMENTS

J Pinto

8 months ago

Just imagine the amount of waste that India and China will generate as the GDP and consumption rises to USA levels.

The country will drown under a heap of pampers.

Jyoti Dua

8 months ago

There should be various existing industries working together on waste management. Waste management need special totally covered truck for collection and transportation of waste. The automobile industry can produce such trucks on assured demand. There should standard waste bins at the source. A industry can produce the same. It is the absence of industry for safe disposal of waste. If Ritu Marya is referring to that, she is right. May be we need foreign collaboration for that.

REPLY

bharati

In Reply to Jyoti Dua 8 months ago

I got this email:

First we avoid asking for carrier bags: we carry our own.
We carry a handkerchief everywhere to avoid using paper napkins.
We rarely pick up leaflets/ visiting cards, etc. unless we really want them.
We refuse water sold in plastic bottles and request filtered tap water in washable glasses, not disposable paper/ styrofoam cups.
All uneaten food, if edible, is given to anyone willing to eat it. With unwanted furniture, electronics, clothes, books, etc. we find suitable recipients.
Household garbage usually consists of a few different materials: plastic, paper, cardboard, metal and glass. We keep it separate in neat heaps as we discard it. So we have one heap of plastic, one of paper, tiny ones of metal foil and glass and very occasionally plastic containers and cardboard. This is given in a clean fashion to two women ragpickers so they can sell it for recycling.
Clean paper/plastic bags, e.g. those used for carrying clothes, are given to roadside vendors for reuse.
As for food waste material, we throw it into gamalas, put in the sun til they fill up. This does not smell if there is enough air between the layers of waste. Then we add a layer of soil and plant methi, spinach, etc. on it. Those without a balcony could befriend a local garden or nursery and deposit their vegetable scraps/ waste food matter there.

We feel sad if someone else has to live by sorting filthy garbage, so we try to keep our garbage separated, clean and neat.


​Hope all of you at your offices and homes​ are willing to try this separation at source and then offer the garbage to ragpickers so they can make some money.

Easy home hacks to remove summer tan
New Delhi : Tanning is the most common occurence during summer season and getting rid of it could be a gargantuan task. Use home remedies such as cucumbers, papaya, tomatoes to get rid of tan without burning or effecting the skin, says an expert.
 
Pankaj Agagrwal, senior hoemoepath at Agrawal Homoeo Clinic, has shared tips for all who face skin tan problems during the hot season. 
 
* Cucumber, rose water and lemon juice pack: One of the best home remedies for removing tanning is cucumber and lemon, which are also known as bleaching agents . Lemon gives you lightened skin whereas cucumber and rose water cools down your skin. Mix the three ingredients together and apply with cotton. Wash after 10 minutes with cold water. Apply the pack everyday to see good results. 
 
* Papaya and honey face pack: This fruit pack helps you to remove face tan with the help of enzymes present in papaya. The enzymes present in papaya lightens your skin tone and reduces the visibility of scars and blemishes. Honey moisturize and softens the skin. Mix half cup of ripe and mashed papaya and add one tablespoon of honey. Apply the pack and rinse with water.
 
* Tomato, yogurt and lemon juice face pack: This face pack has bleaching properties of lemon, tomato and yoghurt, which improve your skin tone naturally. Lemon helps in removing dark spots and pigmentation from sun-tanned skin, tomato juice works as a natural toner to shrink open pores and reduce oiliness of skin, whereas yoghurt moisturises and nourishes the skin. Take three table spoon of tomato pulp, one tablespoon of lemon juice and one tablespoon of yogurt. Mix them well and apply. Let it dry for 30 minutes and then.
 
* Milk powder, honey and almond oil face pack: This pack helps in achieving a clear tone. Mix two tablespoon of milk powder, one tablespoon of honey and few drops of almond oil. Apply the pack, leave it for 20 minutes and wash.
 
* Sandalwood and coconut water pack: Sandalwood powder works as a natural skin cleanser and remove impurities, dead cells and blemishes the skin. Mix one tablespoon of sandalwood powder with coconut water and add few drops of almond oil, apply for 20 minutes and wash.
 
* Saffron and fresh cream face pack: Saffron helps in removing tan, brightening skin, fight pimples and acne. Soak a few strands of saffron in two tablespoon of milk cream overnight, blend both and apply them on face with the help of your finger. Wait for 20 minutes and rinse with water.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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