Investigation highlights how ‘nominee directors’ serve as on-paper representatives of several companies

The recent exposé by the International Consortium of Investigative Journalists (ICIJ) and its Indian partner, The Indian Express, has reflected the long-standing perception that Indian business barons have a particular hankering for the British Virgin Islands (BVI), and not just for its scenery.

Among the 612 Indians included in the list range are Lok Sabha Congress MP Vivekanand Gaddam and industrialists Ravikant Ruia and Vijay Mallya.

In some cases, the name of the investor is mentioned as a “director” or “beneficial owner” of the offshore company, which will contain names, addresses and passport details of the investor in question. The investigation has also shed some light on how a group of “nominee directors” serve as on-paper representatives of more than 21,000 companies, with some directors representing as many as 4,000 firms each.

Some of the companies have said that it was a case of “mistaken identity,” while others have claimed that it is “in accordance with all laws and that no transactions had taken place.”

In Vijay Mallya’s case, he had registered a BVI company called Venture New Holding in 2006 — in which he is listed as the beneficial owner. The UB Group, however, claims that this is normal practice. “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,” Prakash Mirpuri, a UB Group spokesperson, told The Hindu.

The list also includes Thiagarajan Murugesan, who launched the now-defunct Paramount Airways. According to the ICIJ, he started five BVI companies in 2008 and is a director and shareholder in all of them.

Mr. Thiagarajan has clarified, however, that these companies were set up legally as “wholly-owned subsidiaries.” “No transaction has been carried out in these companies. These are non active, non-existent companies,” Mr. Thiagarajan told The Hindu.

Vice-Chairman of the Essar Group Ravikant Ruia, on the other hand, has registered three companies in the BVI, while Essar Power has five BVI accounts. “The companies have been disclosed to the Indian authorities as required under the applicable laws” said an Essar Group spokesperson said.

The eldest son of former chairman of Satyam Computers, Ramalinga Raju, is also on the list. According to the ICIJ, the Rajus set up two BVI companies, Global Network Overseas and Stapley Universal Limited. Teja Raju is listed as beneficial owner of both.

The ICIJ also named the sons and grandson of the founder of MRF over records showing that they have registered a BVI company, Moon Mist Enterprises Limited. The offshore company’s directors are MRF Chairman Kandathil Mammen, Managing Director Arun Mammen and MRF Director Rahul Mammen Mappillai.

There is no official word as yet from the Central Board of Direct Taxes (CBDT) on the veracity of the Indian Express exposé. In fact, there is a studied silence on the issue, even as top officials were huddled in meetings late in the evening.

While a number of senior CBDT officials The Hindu tried to reach were busy in meetings, one top official called back only to excuse himself saying he was not authorised to speak on the issue and that the right official was the media spokesperson. The authorised spokesperson, however, is away in Japan. A Finance Ministry official said that an official statement would be issued in a day or two, if necessary, but no decision has been taken as yet.

(With inputs from Lalatendu Mishra from Mumbai and Ashok Dasgupta)

anuj.s@thehindu.co.in, lalatendu.mishra@thehindu.co.in, dasgupta.a@thehindu.co.in

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