Indian Whistleblower’s Documents Allege Large-Scale Tax Evasion

Photo of a white USB drive sitting on a black laptop keyboard

A whistleblower based in Delhi, India uncovered 1.5 GB of information that allegedly contains information about widespread tax evasion. In a July 13 article in The Pioneer, journalist J. Gopikrishan describes the history of the case and its current status in the Delhi High Court (HC).

The whistleblower, Pankaj Jain, is a software engineer who “first got the sensational data and communications that could pose serious trouble for corporate houses since it contains disturbing details on how to exploit loopholes in the country’s taxation regime and float shell firms across the world.” The documents belong to Nishith Desai Associates, a tax consulting firm with offices around the world. According to the article, the 1.5 GB of data “has 33 files with numerous correspondences between Nishith Desai Associates and big corporates,” as well as “several high-net-worth individuals (HNWIs).”

The article states that Jain and advocate Prashant Bhushan “approached the Black Money Commission, the CBDT and the Enforcement Directorate” in August of 2020, where they sought a probe into Jain’s allegations. “Bhushan also submitted the entire data to these agencies,” the article reports.

Bhushan’s complaint states that Jain’s information, kept “in electronic format stores on an original device,” contains “detailed financial information of a large number of entities and influential Indians, comprising, inter alia, memos, advice, audit reports, emails/correspondence of Venture Capitalists/ Private Equity funds, companies, HNWIs, etc.; and discloses a complex global network of offshore accounts and shell entities incorporated solely for the illegal purpose of evading taxes in India.”

“After the role of Jain in leaking the data came to the knowledge of Desai, he approached the Delhi HC to restrain Jain,” the article states. “On February 17 last year, he filed a case against Jain in Delhi HC directly in the chamber of Justice Rajiv Sahai Endlaw, without going to the Registry. Shockingly, the case was titled ‘Anuradha Vs Bajrangi’ whereas it should have been Nishith Desai Vs. Pankaj Jain.” The article continues to delve into the case’s history in the courts and the whistleblower’s treatment. “On February 19, 2020, the Delhi HC appointed a Court Commissioner along with three Price Waterhouse Coopers (PwC) staffers, four employees from Desai’s office, and four Delhi Police cops to raid Jain’s home at Pitampura in Delhi even though he is named as Bajrangi in the Delhi HC’s records. As many as 30 devices, including several laptops, hard discs, and mobile phones were seized from his home,” according to the article.

The article also reports that Jain was not allowed to attend the virtual hearings. This case, which Bhushan has previously dubbed the “Desai Papers” after the Panama Papers corruption case, was “listed for July 29,” according to the article.

On April 13, 2021, Justice C Hari Shanker “questioned the so-called ‘Confidential Club’ in this case and the need to keep the court orders confidential,” the article states. The Delhi HC imposed the ‘Confidentiality Club’ for this case in the initial hearing: the article says of the ‘Confidentiality Club’ that it is “rarely used in Intellectual Property cases, where petitioners do not want the opposite party to know details of Intellectual Rights.” “The big question is how the ‘Confidentiality Club’ was imposed, as this is just leakage of information of alleged tax evasion, which is already with the CBDT and the ED?” the article asks.

The article further delves into the files that Jain exposed, including highlighting the different companies that Nishith Desai Associates allegedly communicated with. These include both companies based in India and international companies like Ernst and Young and Pepsi Co.

“In his complaint, Bhushan also alleged that the documents showed HNWIs discussing how to evade taxes in India and route funds through tax havens, and take claims on tax implications in other countries,” the article states. Bhushan’s complaint to authorities included a USB drive with two folders: one labeled “briefcase” which has “all available documents,” and one labeled “analysis,” which “contains documents on a few individual/ entities on which a study has been done and which prima facie show gross violation of law,” according to the article.

In a July 14 follow-up article, The Pioneer reported that Nishith Desai Associates reached out via email. “There is absolutely no illegality in anything that we or our clients have done,” Nishith Desai Associates responded. “They are all globally renowned funds who pool funds from different jurisdictions for investment in portfolio companies after doing thorough KYC and after compliance with applicable laws. They need a neutral jurisdiction for pooling vehicles which provides flexibility in terms of enforceability of contracts, simplified corporate laws, robust bilateral investment protection treaty with India, etc.” In detailing the response, The Pioneer said that Desai was “accusing whistle blower Pankaj Jain of tarnishing his reputation and illegally accessing his client information.”

“The Court has already issued restraint orders from sharing the data which has illegally come into his possession. Since the matter is sub-judice, it would not be appropriate for us to make further statements,” Nishith Desai Associates’ response read, “reiterating that his firm’s advices to clients were always consistent with applicable laws and ethical standards.”

Read The Pioneer’s first article here.

Read more international whistleblower news on WNN.

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