2G scam: Offshore firms working overtime to cover tracks
Also in the focus will be details of the meeting of senior Loop Telecom officials with Indian High Commissioner to Mauritius Madhusudan Ganapati who later informed the External Affairs Ministry that the two private sector telecom officials were enquiring about the Letters Rogatory sent by the CBI and Enforcement Directorate seeking details about the transactions made by them.
A joint Indian team of CBI and ED would be visiting the African Island next week to follow the money trail in the 2G spectrum scam.
With the news about their arrival approaching, sources in the Indian High Commission and officials of the Indian banks operating in this island say that the corporates have been bee-lining to ensure that no information was shared.
"Some of them were approaching the Mauritian government through back-channels exerting pressure for not sharing of the information," senior officials speaking on the condition of anonymity said.
The CBI is looking for share patterns of nearly a dozen companies after eyebrows were raised that all of them had a common address of a building in this capital city of Mauritius.
The Indian team would be meeting various officials of the finance ministry, Registrar of Companies (RoC) and Mauritius offshore banking authority to know the details of the companies who had opened bank accounts and were pumping in money to various telecom companies in India.
As many as 10 different entities named in connection with the 2G scam have a common address — The Les Cascades Building on the Edith Cavell Street in Port Louis.
Some of these companies were now approaching the Mauritian government`s RoC and Mauritian Offshore Banking Authority, also located in the same building, with revised forms.
Mauritius-based front companies of foreign investors are often utilised as a route to avoid paying taxes in India.
Investors utilise loopholes in the bilateral agreement on double taxation between the two countries to channel funds.
Recently during the visit of President Pratibha Patil, officials accompanying her had a discussion with their counterparts during which it was agreed to have a Joint Working Group to discuss the 28-year-old Double Taxation Avoidance Agreement (DTAA) treaty between the two countries.
There has been a growing demand from Finance Ministry to re-negotiate the 1983 tax treaty with Mauritius so that India could have access to banking details besides tax related information. The move was also aimed at preventing generation of black money and to stop re-routing of funds through Mauritius.
Re-negotiation includes specific provision of sharing of banking information and also an article on assistance in collection of taxes. Mauritius accounts for nearly 44 per cent of Foreign Direct Investment (FDI) into the country.
Security agencies have been raising concerns over use of the Mauritian route to pump in black money into India especially in the telecom and real estate sectors.
A study by the Organisation for Economic Cooperation and Development (OECD), the global agency working on implementation of international standards on taxation and other matters, has named Mauritius among countries where laws do not meet global standards.
As per the OECD, "Mauritius has revised its legal and regulatory framework to give its competent authority broad access to most relevant information. However, accounting information is not available in all cases and powers to obtain some information are untested".