Pandora's leaky papers

In the largest source of leaked information in history, the secrets and hidden treasures of some of the richest and most powerful people in the world are revealed through Pandora Papers.

• Pandora's papers leaked about 12 million copies/documents that show-
  • hidden treasures
  • tax evasion
  • Money laundering by some of the richest and most powerful people in the world
• For months, more than 600 journalists in 117 countries trawled through the files from 14 sources.
• Information obtained by the International Consortium of Investigative Journalists (ICIJ) in Washington DC.
• The report was published in the wake of the global economic downturn, exacerbated by the pandemic.

What was revealed?

• Predora Pandora Papers, leaks included
  • 4 million documents
  • nearly three million photos
  • more than a million emails
  • about half a million spreadsheets
• These files show that some of the world's most powerful people (including more than 330 politicians from 90 countries) use secret offshore companies to hide their wealth.
• That makes it bigger in volume than both the Panama (2016) and Paradise papers (2017), two previous leaks.

• Panama and Paradise Papers have focused mainly on maritime organizations established by individuals and companies respectively.
• On the other hand, Pandora Papers shows how businesses have created a new normal after countries have been forced to tighten the screws on such offshore entities with rising concerns of money laundering, terrorism funding, and tax evasion.
• It reveals how “trusts” are widely used as a vehicle in conjunction with offshore companies set up for the sole purpose of saving money and other assets by business families and overweight individuals.

• A trust can be described as a fiduciary arrangement where a third party, referred to as the trustee, holds assets on behalf of individuals or organisations that are to benefit from it.
• Used for asset planning and succession purposes.
• Helps large business families to consolidate their assets - investments, shares, and real estate.
• Trust has three main groups:
  • 'Settlor' - a person who sets up, creates, or writes a trust
  • 'trustee' - the person in charge of assets to accommodate a set of persons named by the 'residents'
  • ‘beneficiaries’ - those who lose property benefits
• The Fund is not a separate legal entity, but its legal status comes from the ‘trustee’.
• In some cases, the ‘residence’ appoints a ‘protector’, who has the power to direct the manager, until he removes the trustee and appoints a new one.

• In India, the concept of trustees is given on the basis of the Indian Trust Act, 1882.
• Trusts are recognized by Indian law as a trustee's responsibility to manage and manage assets held in a fund for the benefit of ‘beneficiaries’.
• Not only trusts, India also recognizes offshore trusts.

• More than 300 Indians are present in the 'Pandora Papers'.
• Key figures on the list include Anil Ambani, Vinod Adani, Jackie Shroff, Kiran Mazumdar-Shaw, Niira Radia, Sachin Tendulkar and Satish Sharma, among others.

The government has instructed the chairman of the Central Board of Direct Taxes (CBDT) to lead a multi-agency investigation into individuals and companies labeled "Pandora Papers" media investigations that include:

• Enforcement Directorate (ED)
• Reserve Bank of India (RBI)
• Financial Intelligence Unit (FIU)

Measures taken after an investigation will be subject to dishonest practices such as the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The Act is enacted to prevent black money, undisclosed foreign goods or unknown income.

• Provides “appropriate tax and compensation” in such cases.

The government has already passed the Black Money and Imposition of Tax Act following the discovery of an undisclosed amount of Rs.20,000 crores in investigations in Panama and Paradise Papers.