 Hello and welcome to NewsClick, today we have with us Parujay Guha Takutta, who and his co-author have recently published a story on a money shall we say hidden income or shall we say undisclosed accounts, which have come to light because of the earlier the HSBC whistle blowing and further to that the income tax authorities investigation on this issue. Parujay, the story that you have done for NewsClick seems to indicate that shall we say tax havens have played an important role in Reliance Empire, undoubtedly what this article highlights is how members of the Ambani family, individuals closely associated with the Reliance group and they are associated, used a very complex structure of corporate entities across the globe, in tax havens like St. Lucia, in British Virgin Islands, the Antilles Islands in the Netherlands and so on and so forth, to essentially hide the manner in which an estimated 2100 crore rupees, which if you sort of convert that into US dollars at the exchange rate prevailing at that juncture, which is really around 2004 to 2006, this is soon after Dhirubhai Ambani passed away in July 2002. Now that's about 472 million US dollars, so what they did was they used this very complex structure to conceal income from the Indian tax authorities, now bits and pieces of this story have appeared, first it was Arvind Kejriwal and Prashant Bhushan who disclosed this at a press conference in Delhi after the whistleblower from HSBC's Geneva branch, her Falciani had disclosed this information, then that had about 700 Indian accounts mentioned in it, that's correct, then this information was passed on by the French government to the Indian government and thereafter after Falciani's material was made public, the Indian Express as part of a global sort of journalism network, they went quite deep into it, but they couldn't get the whole story and when I wrote the article for the news click I said here is the full story but after I wrote the story, my sources inform me no that's not the full story, there's more to be told. Now the story from what I understand is that a front set of companies, Motec Software being one of them, which is headed by Anu Tandon, was headed by Anu Tandon before she resigned and became a member of parliament, but this company was in some sense the front for a lot of these activities, but more important than that in terms of tax issues, it is that under Indian law, Indian citizens are supposed to disclose whatever financial holdings they have abroad and that is the violation that is taken place and that's what the income tax department is really finding out this is on. That's correct, absolutely correct. If you're a citizen of India, you hold an Indian passport and you have corporate entities or other entities registered in India, then your foreign holdings any kinds of assets financial assets or other kinds of assets need to be disclosed to the Indian tax authorities. Now in this case, it appears or it has been alleged by the income tax department, but these assets were not disclosed to the tax authorities. Then that's not all, one more point. What was interesting is that the income tax department after the French government came up with all this information that had been provided to the French government by Falciani, what happened essentially was they started what are called reassessment orders against these companies because what had happened was that these reassessment proceedings took place because the accounts were supposed to have been all closed and finally when the order came which was in 2014 pertaining to assessment years that were about eight years earlier, what was interesting is even as this reassessment proceedings were going on, the company MoTeX Software's representatives didn't inform the income tax department that they had closed down that company. But can they close down the company without the permission of the income tax authorities since proceedings are on? And secondly, should that company would have been allowed to close down anyway? That's the interesting part of the information that I have disclosed in that NewsClick article. The Ministry of Corporate Affairs, the registrar of companies, deregistered this company and informed the income tax department. But it seems the income tax department had conveniently forgotten to take notice of this. So it's a kind of... Thereafter we forgot. Oops, we forgot kind of question. And then after they moved code. But that's another story. You'll have to wait for that story. How this all happened. And so that is truly that one wing of the government, typically of course doesn't know what the other hand and other wing of them. This was a particularly interesting case where the Ministry of Corporate Affairs informs the income tax department. But I think also the company concerned has an obligation to report to the Ministry of Company Affairs that we have this thing pending against us and without which actually they cannot wind up the company. We have to inform the Ministry of Company Affairs, the Registrar of Company Affairs that there is something pending against us. This is precisely the point on which the income tax department has moved code. Okay. Coming back to the other issue that it is not that there is a tax notice regarding unearned income for these accounts abroad because we do not know what income they did or didn't earn though obviously the figures are there in the HSBC papers. What is really the issue is under law they should have disclosed that they had this foreign holdings which is what they didn't do and that's a charge against them. And they have to explain now where did this income come from and how much expenditure do they have and therefore what are the implications of this holdings in terms of the tax liability in India is that right? Absolutely correct. You've analyzed it perfectly. Okay. Coming back to the other issue. Now something which is forgotten in India that okay here are this amounts which are there compared to the size of a money holdings and all don't seem to be astronomical. It's a very small small part. As they would say in Hindi. Yes. The question is what is the role the tax havens play in the affairs of companies like Ammanis. Now we had for instance the KGBC issue where the CAG had made various strictures on the kind of shall we say expenditure supposedly that reliance had done in the KGBC case. They had a lot of for instance they had drilling ships, they had drilling expenditures, they had hired various things. Absolutely. Let me remind you of two very famous statements made by our honorable Prime Minister, Mr. Narendra Modi. He says neither will I accept bribes nor will I pay bribes. He also made another statement which it says before the elections that he would bring black all the black money which Indians had stashed away outside India. And he arrived at a calculation that he would be able to distribute 15 lakh rupees to every poor family in India. Subsequently of course the BJP President Mr. Amit Shah described this as Chunawee Jumla. Means it was a wild exaggeration and I mean it was nothing near the truth. But the short point is the point that you have made Indians for many years have been illegally surreptitiously taking away money and this process is facilitated by tax havens, no tax or low tax jurisdictions. On the KGBC I have a book, I also have another book written with Shinsani Jain which is called Thin Dividing Line India Mauritius and Global Illicit Financial Flows. And these two books seek to document how this entire process happens. Essentially across the world there are about 90 odd so called tax havens and some of these tax havens are within countries like the state of Delaware in the US. But you know the interesting part of a lot of this is that each financial area as it were you have the European Union that has its tax havens much smaller than the Brits. Brits have the most as we said because they have a much bigger colonial empire than others so they could locate in different parts of the world and they can also talk about it being some being independent of the of their all independent countries. Yes they are all supposed to be sovereign independent sovereign nation states. So all of this the expertise has been provided interested enough by Swiss banks and the city of London. These are the two ones. And what I thought I could add to what you are saying interestingly especially after the great recession of 2008 and even before that the OECD the Organization of Economic Cooperation Development which is essentially a club of some of the most developed countries in the world they themselves have been very concerned and they have an initiative calling for greater transparency it's called BEPS, Base Erosion and Profit Shifting where large corporations including some of the biggest IT companies Apple and how they have used these jurisdictions these low tax no tax jurisdictions popularly called tax havens to avoid paying taxes and the dividing line between quote unquote legal forms of tax avoidance which accountants and lawyers say good tax planning so even if it's legal the issue of ethics arises but then the dividing line between a legal form of tax avoidance and illegal form of tax evasion which includes money laundering and money moving at high velocity across various tax havens which is what the Ammani case is all about even the OECD today says this is bad for the economy of the world it is widening inequalities. I'd like to add two things to it one is what's the difference between tax avoidance and illegal tax shall we say evasion it's having good lawyers and good accountants. So that is one part of it and the second part of it it's interesting that a lot of people have said one of the reasons for Brexit is because Britain was very unhappy with the European Union already this British finance capital is very unhappy with the threat in the European Union of tax avoidance being limited and therefore tax havens to be brought under some kind of control this is supposed to be one of the very strong argument for Brexit. Just like after reading the article that a news leak published written by me and Abhidash Gupta Prashant Bhushan set out a tweet wondering whether some of this money was from alleged invoicing fiddles in the Krishna-Gudavari base and you know which on which a report of the controller and auditor general already exists so this is part of the way finance capital has been working and it's reached such levels that even within the establishment as I said the OECD there's a lot of concern about this so Apple and Google and Microsoft may use Ireland but the others are unhappy EU is saying should you be allowing this kind of thing because what is happening at the end you are depriving independent sovereign nation states on what they consider is their legitimate share of tax revenue which is meant for healthcare and education and roads and electricity and water etc etc and that's not all because it benefits the rich you are actually contributing the growing inequalities across the globe and also in India. We are not here arguing that what Ambani did with KG Basin is illegal because unfortunately what they have done is under international financing today being done by all big companies so at the most that we can catch reliance is on not disclosing this which is what is exactly the case in the income tax department that you should have disclosed that you are holding such foreign assets abroad. Can I recount a little anecdote the infamous gangster of Chicago Al Capone you know was accused of all kinds of crimes for trafficking in women to illegal gambling you name and killing people and finally why was your answer how is he arrested income tax department the internal revenue service of the US government finally got him. So here is the issue really that much the much bigger issue is really the existence of tax havens which allow for global capital to escape the tax net as you have said and allows therefore what would have been otherwise redistributed as a part of taxation allows it not to be taxed and therefore increasing the inequalities globally this is the crux of what we see is a role of tax havens in the larger picture of the global economy and essentially what we see irrespective of what they did or didn't do that seems to be also the picture in this particular story that you have done that this seems to be the role that this tax havens play and at the end of it we can only catch people for non disclosure of foreign holdings rather than what they have done because essentially the big fish shall be say the European Union the United Kingdom the United States are all into this very heavily. Okay thank you so much I completely agree with your analysis I hope that some of those who are watching the two of us converse will go and read the article in NewsClick and I must apologize to them at this juncture itself I told them here's the full story no the full story is not yet been told there's more to be told. Thank you very much for apologizing to be with us and we hope that we will see further disclosures not only of this but of other investigative journalism that you and your colleagues are doing this is all the time we have today for NewsClick do keep watching NewsClick and also visit our YouTube page.