The document discusses a data theft of offshore company information from the British Virgin Islands (BVI) that has implications for an ongoing tax evasion investigation in India. The stolen BVI data had identified 610 Indians with alleged undisclosed wealth in offshore companies. However, a complaint was filed that the data was stolen, which could allow those under investigation to argue the data is illegitimate and frustrate tax authorities' efforts. Legal experts say courts are unlikely to accept stolen data, and it may be difficult for authorities to demand information through a tax treaty if the data is considered stolen.

1. Virgin Islands Data Theft Stumps I-T
Tax offenders could take advantage of situation
A cat-and-mouse game is about to begin between Indian tax authorities and wealthy
individuals who find their names in the public domain for allegedly floating companies
in the British Virgin Islands (BVI) to stash away undisclosed wealth.
While these persons have started receiving notices from the Income-Tax Department,
seeking explanation on their shareholdings in offshore entities, a recent development
has emboldened these individuals.
Portcullis, the Singapore-based service provider that devises clever structures to help
rich Asians save tax, has filed a complaint with the Virgin Islands police as well as
alerted the Singapore police about a data theft.
Among the 610 Indians whose names are now on the Internet for alleged BVI links,
many could take advantage of the development to frustrate the tax department‟s efforts
and even wriggle out of the mess.
Till now, it was felt that tax officials were on a stronger ground as the data was an
outcome of investigation by a consortium of journalists and the findings were available
on the Internet. Compared with previous information like list of Indians with unreported
bank accounts in HSBC Switzerland and LGT Bank in Liechtenstein (a tax haven near
Germany), the data on firms in BVI, a Caribbean tax haven, was perceived to be far
more tenable. “One can go through the BVI information on the Internet. Indeed, the tax
department notice begins with a reference „as per information in the public domain‟,”
said a person familiar with the development.
But following Portcullis‟ claim that the British Virgin Islands data was stolen,
individuals who have come under the glare would dodge the tax office as stolen
information carries little legitimacy.
“This is the stance they are taking. Courts are unlikely to accept stolen data and
invoking the treaty with BVI too becomes difficult. The treaty has no scope for fishing
expedition,” said a senior tax professional and an expert on offshore trust matters.
Hide & Seek
I-T DEPT has info on Indians with unreported wealth in HSBC Geneva, LGT in
Liechtenstein, and now BVI

2. PORTCULLIS, THE
service provider for many BVI cos, says the data is stolen & has filed police complaint
STOLEN DATA may be brushed aside by courts
HSBC ACCOUNT holders are dodging the dept as the data is stolen Legal Hurdles in
Stolen Data
Only specific information about individuals or companies that are under investigation
can be shared. While these individuals in the BVI list have come under the I-T probe,
the very investigation is based on stolen data… This is where these people are pinning
their hopes on,” the tax expert said.
Tax officials were suspecting many Indian residents of holding shares in BVI
companies, and the shares were bought well before the Reserve Bank of India allowed
the liberalised remittance scheme for buying shares in companies abroad. On June 14,
the consortium released information about 100,000 secret companies, trusts and funds
in offshore hideaways.
But Portcullis Trust Net Group claims that the data theft ended in 2010 and has even
identified an individual whom it suspects was responsible. The service provider, which
has been in business for more than 25 years, has hired KPMG to conduct an IT security
review.
Thanks to legal hurdles created by “stolen data”, the tax department is yet to prosecute
anyone in the list of Indians with accounts in HSBC Geneva. Despite HSBC‟s
significant business interest in India, the British bank has successfully resisted the
government and tax department‟s efforts in the past two years to obtain information.
The bank maintained that it was neither in a position to share information (due to
customer confidentiality) nor comment on stolen data. In case of LGT Bank, the
department, however, has made certain progress as some of the account holders either
out of panic or choice decided to co-operate with the department.
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