India ranks 19th among 180 countries in terms of the number of names appearing in the Paradise Papers, a global media exposé of offshore tax evasions published last month. Seven hundred and fourteen Indian individuals and entities are named in documents leaked from two financial companies – Bermuda’s Appleby and Singapore’s Asiaciti. The Indian government has announced an investigation by a multi-agency group. It had taken a similar step after the publication of the Panama Papers, a set of 11.5 million files leaked from the database of the world’s fourth-largest offshore law firm Mossack Fonseca, 19 months ago. Though the leaks did not feature many big Indian names, globally they have changed the debate on hidden wealth, offshore money and taxation. The International Consortium of Investigative Journalists, which investigated the leaks in partnership with 96 news organisations worldwide, won the Pulitzer Prize this year for its work making sense of these two leaks.

In an interview to Scroll.in at the Global Investigative Journalists Conference in Johannesburg in November, Gerard Ryle, director of the International Consortium of Investigative Journalists, explained how they pulled off the world’s most ambitious cross-border investigative journalism projects and what the leaks mean for India.

Edited excerpts from the interview:

What according to you is the biggest discovery from the Panama and Paradise leaks?
It is going to be a very strange answer for you. But the biggest discovery is the fact that a lot of this is legal. And the fact that it is legal, for me, did not stop it from being a story. In the beginning, there were a lot of things we had to think about. And one of them was, what happens when people come back and say this is all a legal system?

In India, a lot of people who have been named in the leaks have said they were doing all this within the legal framework. So, where are they wrong? Are we just questioning them on moral grounds?
Well, no. The stories show that this whole thing is fake. I mean, there is nothing there when you go to these islands. They are basically setting up false entities for one purpose only, to avoid tax. And I think it resonates with every person. Because if they are not paying taxes or if they are getting away with not playing by the rules, then this kind of breaks a social code we all live under. When we live in a country, we agree to the rules of that country. And yet this world, which is a fake world, does nothing there. The money never leaves India. It is just that on paper, it leaves India. So that you do not have to worry about paying taxes. Sometimes it is money laundering, sometimes it is arms dealing, it is tied in globalised crime, it is all sorts of things. But it is fake. And so, just because it is legal does not mean that it should happen.

You are saying there is no physical transfer of money. It is just on paper?
It is all only on paper. The money stays in the banks, in the major banks and financial institutions. And here is the thing that we learned: it is the major accountancy firms and banks that are behind this. You know you have law firms like Appleby or Mossack Fonseca but they are just the conduits, just the servants. All the schemes that are being drawn up are by the bigger people. So, it really just shows the farce of the whole thing.

There weren’t many big Indian names in these leaks.
You can only report on what you see. You have to work on the documents. Whatever the documents are, what story comes, rather than your preconceived notions of what you wish for. Why are there no big Indian politicians? Because we do not have the right law firm. I guarantee you that there is another firm. There are 800 of these firms out there in the world that we know of and we have only reported on three, four or five of them.

What is the scale of offshore money transactions that these leaks point at?
These are just a couple of law firms. Just a couple of organisations that specialise in setting up accounts for offshore tax havens. They work for their clients, which are the major banks and accountancy firms and rich people around the world. They advise them that this is the best way to structure your finances or to hide your money from your wife or whatever it is they want to do. A lot of it is money laundering.

When the money does not even get physically transferred, how do the companies come back and say everything is legal? What is the loophole they use?
Well, what the big companies do is that they make sure the tax ends up in a jurisdiction where they are not taxed. So, say the corporate tax in India is 35%. What they [the companies] do is that they put intellectual property into a company in Bermuda where there is no tax. And then, basically, the requirement on the Indian firm is to pay for the rights to that intellectual property. They will charge the Indian firm a lot of money so that the profits from India certainly go to Bermuda where there is zero tax. Then you are basically able to avoid tax in India.

This is a very simple example. But these structures are a lot more complicated. Sometimes, the money launderers and politicians might have a company in Bermuda, which they would link to another offshore firm in the British Virgin Islands, which is linked to something in Jersey. They go from one offshore jurisdiction to the other and there are secrecy laws in each of these places where they cannot tell anyone anything. So, if you are chasing the money, even if you are a government, you start to give up after a while. It could take you three months to go to Jersey and then you have to go to the British Virgin Islands. And even if you get there, you are likely to be sent over to Bermuda, where you have to start all over again. In which case, the money has disappeared and no one knows where it has gone. It is all very difficult to trace. It is all about secrecy.

How did the idea of collaborating globally with journalists come about?
In American non-profit journalism tradition, what happened is that you got the money, you found a story, you then hired reporters and did the story. And at the end, when you had the story, you tried to get it published. They [the International Consortium of Investigative Journalists] were doing it this way. But when I took over six years ago, I decided, because we did not have much money, that it was not going to work for me. What I thought is that if I can find a good story, we would need the resources to go to the reporters, get them interested in the story, get their media organisations involved and then they would give us all the reporters we needed. And so, what we really needed to do then was to find a really great international story. And then the network would go from there. So we did some little stories to start with. And then we did our first big offshore story, which was based on a set of leaks that I had taken with me when I joined. I remember looking at the information and seeing names in Canada and in India and all these other countries and I thought, wouldn’t it be great if we knew a reporter in each of those countries? So, the idea of reversing the International Consortium of Investigative Journalists started from there.

Gerard Ryle (left) and Marina Walker (right) of the International Consortium of Investigative Journalists. (Credit: icij.org)
Gerard Ryle (left) and Marina Walker (right) of the International Consortium of Investigative Journalists. (Credit: icij.org)

How did you pull off global investigations of the scale of the Paradise Papers and the Panama Papers?
We had no money. So, we decided very early on that we were going to use technology a lot. Half of our team are technologists, they are computer programmers. We knew we needed to get all the journalists working together. So, the best way to do that was to build an online newsroom. The clever guys who worked with us decided to use software that was designed for dating websites. So, they just changed it and built it into kind of a Facebook for journalists. You can see who is online and who is not, you can talk to each other, you can share information, you can share findings. And one of the rules we had from the beginning was that if you are going to work together, you can have no secrets. So, if you find your prime minister or find the queen of England, you have to tell everybody, no matter who you know.

The other big breakthrough we had was when we learned during the process that we have to have the documents available for all the journalists. So again, the solution we found was an open source software designed for librarians. All the documents were up on cloud and they were searchable and readable by all the journalists. Over the years, we got better at it. And as we evolved, we found this French software called Neo4J that allows us to put names and addresses and auction companies into nodes. So, you see that is a node and that is a node and that is a node and then you are able to see these amazing connections between those nodes. For example, in the Panama Papers, as we were researching stories, the Federal Bureau of Investigation began to indict officials of the Fédération Internationale de Football Association or FIFA. And we realised that a lot of the people they were arresting or accusing were named in the Panama Papers and they all went back to this one node. So, we looked at that node and we found that it was in fact a law firm linked to a person who was sitting on the FIFA Ethics Committee. I mean, you cannot make it up. And we would have never found out about it without the technology.

How do you build trust among journalists coming from such diverse backgrounds and working with such sensitive information?
We started with smaller investigations. Marina Walker, who is the deputy director [of the International Consortium of Investigative Journalists], says it is like building a dinner party. You are only going to invite people you know are going to be good guests. You invite people who abide by the rules, people you have worked with before, and the ones you like. Anyone you do not like, you do not invite back, and they know that. No one wants to be that person who ruined it for everybody. So, there is a lot of peer pressure. I mean, if we had the Paradise Papers, Panama Papers and the Germans had decided to do it by themselves, you know, they would have had a good story for Germany but they would not have half of the worldwide fame they have now.

What kind of ethical issues have you faced when dealing with such leaks?
The information has obviously been taken without the permission of the companies. So, we start with that. And we are also dealing here with anonymous sources because we do not know where the information is coming from. So, the obligation on the journalists is to really go outside the documents. You have to make sure the documents are real first. You see, a lot of context we are putting around each story and it is all based on the documents. And very few of the stories are just like oh here is a document and this is what it says.

A good example would be the Iceland prime minister who lost his job. We knew he was there probably from day one, because we found him. And we thought this is interesting, but then we realised he had set up the offshore company before he became a politician. So, there was no story. But then the Icelandic reporter went on to check whether he had declared it, and he had not. That became interesting and then we did some more research and found that he had sold the company to his wife for a dollar a day before he was due to tell people. But that still was not enough. So then the reporter went to the bankruptcy court of all of the Icelandic banks and, lo and behold, among all these offshore companies and anonymous outlets that owed money was the prime minister’s offshore company. And that became a story because he had been elected to solve the financial crisis in Iceland. So now we had a story but you can see it took an awful lot to make it there. I mean, if we had published a story on day one with what we knew, he could have easily come back and said, look I wasn’t even a politician then.

Iceland Prime Minister Sigmundur David Gunnlaugsson was the first major casualty of the Panama Papers investigation. (Credit: AFP)
Iceland Prime Minister Sigmundur David Gunnlaugsson was the first major casualty of the Panama Papers investigation. (Credit: AFP)

Where do we go from here, especially in a country like India where we are yet to see these leaks make a big impact?
Well, I think there will be leaks. There will be more information that will come out, whether it is the International Consortium of Investigative Journalists who gets it or Süddeutsche Zeitung or The Indian Express. You know journalists will get the information if it is out there. I think you will see more information like this come out because we are kind of in an era where people can gather information on a scale never thought possible before. Because technology basically allows you to put a thumb drive in and scrape up millions of records in seconds. We could never do that before. And so, we are kind of in an era of leaks.

Where do you see the Indian media in the world of global investigative journalism?
I would like to see it get more involved in collaboration because I think once you get involved in collaboration, you know the techniques that other reporters use and you also teach them in return. I mean, everyone has something to teach the other. One of our big things is to have people from each country work on the story rather than have the Americans or the British fly to India to do a story in India. I would rather have someone from India do a story there and tell me what is important for India. It is a much better way of working than having foreign correspondents come in and do the story from a different perspective. We have published in 67 countries for the Paradise Papers. And we will have more reporters coming to us and saying we put up the public data. They will come back and say, hey I am interested in this company, and then we help them with it.