Monday, April 4, 2016

Panama papers finger seven Nepalis, identity still unknown

There has been no end to illegal outflow of money accumulated through tax evasion and corruption, according to international investigations.
The International Consortium of Investigative Journalists (ICIJ) yesterday disclosed that there are seven Nepalis, who are shareholders in offshore firms in tax havens. The ICIJ investigation has, however, not revealed any names, though the documents do name a company, Nepal Ventures Limited. Details about the company – either it is a real Nepali company or the name only is Nepal Ventures – have not been provided.
The prolonged political transition in Nepal has made it easier for domestic and foreign firms operating in Nepal to swindle money out of the country, according to an investor, who does not wish to be named. "They have been evading tax and sending the illegal funds to offshore firms," he said. He, however, claimed that detailed investigations by the Department of Money Laundering Investigation (DMLI) could expose the outflow of money accumulated through tax evasion and massive corruption, if the government has the political will to investigate. "The probe will expose the nexus between politicians, bureaucrats and business people."
Unstable governments and policies due to political transition and weak governance, coupled with a lack of political will to crack the whip on corruption have encouraged the illegal outflow of money, according to him.
ICIJ, a nonprofit based in Washington DC, has published a report on the offshore financial dealings of 128 of the world's rich and famous. The report has been prepared after long and extensive investigations by an international coalition of media outlets is based on documents provided by an anonymous source.
According to the ICIJ, as many as 72 world leaders from Russian president Vladimir Putin to Pakistani prime minister Nawaz Sharif and Indian actor Amitabh Bachchan have hidden their assets in the offshore companies.
The German newspaper Süddeutsche Zeitung received 11.5 million encrypted internal documents of a Panama-based law firm, Mossack Fonseca, spanning between 1970s and 2016, and shared them with the ICIJ. The leak thus dubbed the 'Panama Papers' contains mostly emails, PDF files, and photo files belonging to Mossack Fonseca, one of the largest providers of offshore financial services.
A global network with 600 people working in 42 countries, the law firm operates in tax havens including Switzerland, Cyprus and the British Virgin Islands, and in the British crown dependencies of Guernsey, Jersey and the Isle of Man.
British Virgin Islands is one of three key investment sources - after India and China - for Nepal, according to latest data.
The central bank had freezed Rs 3.5 billion that entered Nepal in the name of Mukti Shree Group, suspecting back channeling of black money.
Earnings from corruption and tax evasion is sent to offshore firms and back channeled to the country in the name of loans, according to business people.
Most of the services the offshore industry provides can be used for legal purposes and by law-abiding customers. "But the documents show that banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption," the papers read, adding that the files show how these fixers and middlemen protect themselves and their clients by concealing suspect transactions. "In some instances, they work to head off official investigations by backdating and destroying documents."
Last year also, the central bank, the Revenue Investigation Department (RID) and the Department of Money Laundering Investigation tried to investigate suspects, after yet another revelation of illegal outflow of money in a Swiss Bank.
However, we could not find any authentic information, said one of the investigation officer not wanting to be named.
The central bank wrote to RID to look into the matter, the official said, adding that the countries where such bogus companies have been registered are not compelled to provide information, nor can the banks be forced to share their clients' details.
Likewise, the Department of Money Laundering Investigation had also started to profile names that were under suspicion. "But due to lack of Double Taxation Avoidance Agreements (DTAA) and bilateral agreements to share banking information, our investigation reached nowhere," the investigating official shared.


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