Paradise Papers: How Raj Kundra's family evaded taxes worth millions
One of the Indians named in the Paradise Papers leak is British citizen Raj Kundra, Shilpa Shetty's husband, and his parents. According to offshore law firm Appleby, the Kundras used a layered offshore trust-company structure to channel money and pick up interests in four companies in India and the UK in 2009. Appleby had to struggle to acquire necessary undertakings. Here are the details.
What did the Kundras do?
In 2009, Credit Suisse (Guernsey), trustee of the Kundras' The Eclipse Global Trust, invested EUR 2mn in Green Energy (Mauritius) which it had acquired through a Bahamas company. Green Energy then acquired 40% of issued and paid-up share capital in Preah Renewable Energy, which owns interest in Freeplay India. Freeplay India, in turn, owned stakes in Freeplay UK and UK's Baylis Generators Limited.
What issues did Appleby flag?
Appleby, through which the investment was made, couldn't get necessary undertakings from the Kundras: rules said funds couldn't come from (Indian) sources for investing in a company that was investing in India. The fund transfer also suspiciously happened almost at the end of the deadline. In February'11, Credit Suisse Trust stopped communicating with Appleby altogether. It isn't clear if the Kundras cleared their liabilities.
What's up with the companies now?
Eventually, Freeplay India and UK registered crores of losses. Freeplay UK was placed in liquidation. According to the Mauritius corporate registry, Green Energy is now "defunct". At the time of publication of this report, there was no comment by the Kundras.
Who are the other Indians named?
Other Indian individuals and entities named in the Paradise Papers leak include Hindustan Times, FIITJEE, MoS civil aviation Jayant Sinha and MP Ravindra Sinha. SEBI officials have clarified merely being present at an offshore tax-friendly site doesn't violate laws, but non-disclosure of such assets will be investigated. Some entities named are already being probed by the SEBI.