Swiss banking major UBS AG figures as the “master client” for several offshore entities floated by Indians in tax havens such as British Virgin Islands (BVI), according to the database put up by the International Consortium Of Investigative Journalists (ICIJ). Master client refers to an intermediary or go-between, which helps a client set up an offshore entity.
To be sure, ICIJ itself says there are legitimate uses for offshore companies and trusts. “We do not intend to suggest or imply that any persons, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly.”
Among Indians helped by UBS AG are Vijay Mallya of UB Group and tea tycoon Yashovardhan Lohia. A UB spokesperson had told The Indian Express in April: “Dr Mallya is a non-resident Indian with business activities in different parts of the world. It is a 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.” Lohia could not be reached for comment. (KEY TERMS)
While UBS AG’s London unit helped Mallya set up Venture New Holding in BVI in 2006, the bank’s Singapore unit was the master client of Lohia’s Golden Charm Universal, a BVI-based standard international company.
Among other Indian clients who used the services of UBS AG’s Singapore unit to set up offshore entities are Mumbai-based couple Sachin and Richa Karpe. Sachin and Richa were shareholders and directors of Capital Alps Universal, set up in BVI in 2006. The Offshore Leaks Database showed the entity’s status as “struck/defunct/deregistered”, suggesting the company might not be active any longer.
In 2006, Sachin Karpe was working with UBS wealth management’s Asia desk handling Indian clients.
Sachin Karpe was fired by UBS in 2008 and was penalised by the UK’s financial regulator, Financial Services Authority, for aiding an Indian corporate group and its illegal offshore vehicles to invest in Indian securities in violation of regulation.
Sachin Karpe did not respond to an email questionnaire asking about the objective of setting up Capital Alps sent on Sunday and a subsequent reminder.
In response to an email seeking comments, UBS spokesperson Mark Panday said: “Master client is not a reference we use and, therefore, cannot comment on what it means or refers to.” The spokesperson added: “For your guidance, there are many legitimate planning purposes and reasons for individuals from many countries to establish offshore companies, including aggregating assets for specific investment strategies, or simplifying ownership transfer or inter-generational asset transmission.”
Panday also referred to a statement made by The Portcullis TrustNet Group, which he described as “an external service provider engaged by individuals who have planning needs”. Portcullis appears as the record and register keepers of these offshore entities.
The Portcullis statement said in a statement on its website it “has identified an individual whom it strongly suspects as having been involved in the data theft that has led to information being published in a series of articles coordinated by the International Consortium of Investigative Journalists. A report has been filed with the Royal Virgin Islands Police Force, and they are investigating the matter”.
Portcullis added: “Based on our review, we have good reason to believe that the data theft ended in early 2010. Notwithstanding this, we have engaged KPMG to conduct an IT security review and we have reviewed our physical and information security at all levels.”
In several offshore entities that UBS helped set up, a company called Sharecorp Ltd acted as nominee shareholder. A nominee company acts on behalf of the beneficial owner of an entity to provide an extra level of secrecy, according to the database.
Sharecorp is nominee shareholder of at least 50 Indians and holds stake in a few hundred offshore entities, according to the database. Sharecorp was a nominee shareholder in both Mallya’s and Lohia’s offshore companies.
Eighteen entities based in Mumbai, 13 in Delhi, three in Kolkata and two in Chennai used Sharecorp as a nominee shareholder in their offshore entities. Sharecorp itself is a standard international company incorporated in BVI in April 1996. Portcullis Trustnet and Singapore-based David Chong Kok Kong were listed as Sharecorp’s shareholders.