Dubious firm takes Mauritius route to invest in India

Tax haven funds: Govt shuts one door, opens another

J Gopikrishnan


A little over a year after it clamped down on flow of money
into the country from tax havens abroad, the UPA
Government has once again opened the country’s doors to ‘dubious’ funds.

The Cabinet Committee on Economic Affairs (CCEA),
in its last meeting on October 1, cleared a twice-rejected
proposal of the Foreign Investment Promotion Board (FIPB)
for bringing in $135 million (Rs 650 crore) from Mauritius to
a Bangalore-based firm.

The application submitted to FIPB by Forum Synergies (India)
PE Fund Managers Private Ltd to receive the “contribution”
from the Mauritius-based India Knowledge-Manufac-turing
Company was rejected twice after objections by intelligence
agencies. According to sources, the agencies had raised doubts
on the ownership pattern and fund sources of the Mauritian firm.

The revenue department too had reservations that the proposal
may involve an alleged “treaty shopping”.
‘Treaty shopping’ refers to taking advantage
of the double taxation avoidance agreement by
routing an investment through Mauritius.

The FIPB had first rejected the proposal on August 8, 2008,
at its meeting chaired by then Finance Minister P Chidambaram.

The CCEA Press release on the latest meeting cleverly sidesteps
the funds’ Mauritian origin. “The CCEA approved the proposal
of Forum Synergies (India) PE Fund Managers Pvt Ltd to accept
contribution up to $135 million from India Knowledge-Manufacturing
Company under the foreign direct investment route and to
issue Class B units and Class C units of Forum Synergies
India Trust to the Knowledge-Manufacturing Company,” the release said.

After several controversies on fund flow from tax havens
like Mauritius, Cayman Islands, Guernsey Islands and
Cook Islands, the Government had been shelving proposals
for investment from these countries.

Samir Inamdar, Sudhir Kant and Prasant Goyal head the fund
acceptor firm, Forum Synergies.

The company also has an office in the US.

But hardly any details of the Mauritian firm are
available in public domain.

Despite an extensive search, one could not find any
trace of the ‘India Knowledge-Manufacturing Company’.

In May last year, the CCEA had cleared Agam SPV Six Ltd,
a firm in Cayman Islands, for investing Rs 1,300 crore
in airport development in India.

After The Pioneer’s expose on irregularities of the approval,
FIPB ordered an inquiry and the project was later shelved.