The Wild Goose Chase


190111satish.jpgUSA has embassies across the globe and in every embassy there is an ambassador whose sole job is to send a telegram to the US called a cable. These cables include all the gossips, rumors and updates about a country and many of its important people. For example a cable might say that Vladimir Putin is a corrupted person with a weird face. Yes, that is how informal and delicate they are. In 2010 Julian Assange; the founder of wiki leaks, hacked into the U.S embassies and released 1.7GB of cables. This shook the world and critically damaged the relations of the United States with many of its ally countries.  In 2013 the offshore leaks of 260GB and in 2014 the Luxembourg leaks of 4GB had a huge impact on the world. But today, the Panama leaks of 2016 contain two thousand one hundred and sixty giga-bytes of highly sensitive data which is roughly 1270 times the data released by Assange. To read through the 11.5 million files at least 2 years are required and in one week twelve country leaders and 29 billionaires have been exposed. The papers have already exposed extremely influential people from over 202 countries. To understand the situation in Panama we need to understand everything about black money.



In simple words black money is the money earned from illegal activities or transactions by bypassing the counties regulations. The proceeds of such underground economic activities are usually in cash, are not reported and hence not taxed. Recipients must hide it, spend only in the underground economies or make it legal by the process of money laundering. To prevent paying high rates of taxes companies looks for tax havens which are sovereign countries that offer very low or zero tax rate along with financial secrecy and lack of transparency and due to the fact that they are sovereign, no one other then the heads of state have a say in the policies. The black money is kept in offshore banks of tax havens.



Large multi national companies start using tax avoiding strategies to shift their profit to low tax rate countries which badly affects the tax collection of their home countries. This is referred to as base erosion and profit shifting. As the US corporate tax is forty percent, companies like apple and google open subsidiaries which are companies whose major voting stock controlled by another company (usually referred to as the parent company or holding company), in Ireland (a tax haven) and start booking profit there.  The R&D account is put in the US. This helps a MNC save billions of dollars. But no worries, what apple and google are doing is absolutely legal although undesirable.


But people who make money using prostitution, human trafficking, drug trafficking, deep web, terror, political dealings, etc. make money from illegal activities and hence do not report this money to the government, making it black money. These people have to convert their income coming from such activities called black money into seemingly illegitimate money or assets called white money. The conversion of black money to white money is money laundering.16034741-money-in-washing-machine-close-up-Stock-Photo-laundering.jpg


You might be thinking why is the heading of this blog ‘The Wild Goose Chase?’

The reason I named this blog post ‘The Wild Goose Chase’ is because the method of chasing black money is useless. What the governments of India is looking for is just 15-20% of 70% of 10% of 1 trillion dollars which is roughly 70 billion dollars. The government did not realize until the Panama papers were released that 90% of the black money which is estimated to be 50% of white economy (1 trillion dollars) is laundered within the country and only 10% goes abroad. Out of the 10%, 30% comes back to India, therefore the whole approach to find black money was wrong.


So why are the panama papers important? Remember when a thread of our sweater or sock used to come out and we used to pull it, more and more thread used to come out, the Panama Papers have given that thread in the hand of a ICIJ which is the International Consortium of Investigative Journalists. Now enough of the highly complicated and boring stuff let us dig into Panama. What happened in this small place which connects North and South America and divides Atlantic and Pacific Ocean?


BlnaY_mossack_fonseca.jpgA Panama company named Mossack Fonseca sells shell companies world wide. In a short span of 40 years Mossack Fonseca has incorporated 214,000 offshore companies trust and foundation. It does a simple thing (just kidding it is not even close to simple, but I have to write that it is simple so that you keep on reading), by offering fake directors to hide original owners name it makes shell companies look like genuine legitimate businesses. The owner funnels money through multiple shell companies in different havens and thereby makes it very difficult to trace. The money is laundered and made white by the end and it is impossible to trace the path of money due to the number of havens.


Everything was going smoothly, until one day one man realized after 40 years that what he was doing was not right. You see how deadly realization can be. He actually called a newspaper and said ‘give me your email id I want to send you all the money laundering records this planet has seen.'(If this was a plot for a movie you guys would give the writer a tough time!)


Now some of the most amazing things we got to know in seven days.


  1. Daughters of the president of Azerbaijan secretly control gold mines.
  2. African president Jacob Zuma is making money of oil in DRC.
  3. Putin’s friends have stashed $2 billion abroad.
  4. 500 Indian names figure in the list
  5. XI Jinpinj ( Not eleven Jinping) who is the ruler of China also figures in the leak which is shocking because he started a brutal anti corruption campaign in China and has been ruthless. His brother in law also has shares in two companies in the Virgin Islands. But the Chinese would never get to know about all this unless they use a VPN or travel abroad.
  6. china-xi-jinping-discipline-inspection-jan13-2015.jpg



After the coming of Panama papers some things are unambiguous.  To fight against black money, national governments have to clean up their international systems first. Shadow financial systems need to be regulated just like global financial banks. Tax evasion should be a criminal offense. Beneficial ownership records need to be created to identify real owners. Cronyism needs to be tackled. Most importantly cash should not be a medium of exchange while purchasing real estate. If we keep going on the path we are on now, then it is needless to say that the whole chase is going to be a wild goose chase.


In the end I would just like to tell you all that I really don’t understand why people do so much for more going more and more money. People are ready to kill others, sell others, play with the life of others and harm others. They are ready to do a hundred frauds for materialism. If you are one of these people or even if you are not, just watch the video below and realise, for the love of the almighty himself that money is insignificant.


One comment

  1. Nilesh Jain · April 10, 2016

    Great Finish of Blog..Great thoughts and important message.
    Enjoyed reading ” The Wild Goose Chase”
    Keep it up Nakul !


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s