At G20 meeting, Indian Finance Minister advocates to tackle misuse of CBI programmes

On 9 June, the Indian Minister of Finance and Corporate Affairs Nirmala Sitharaman expressed her concern over the misuse of investment migration programmes by economic fugitives at the G20 Finance Ministers and Central Bank Governors meeting in Fukuoka, Japan. The yearly high-level meeting brings together representatives of the world’s biggest economies, as well as representatives of other invited countries and international organizations. Attendees included Steven Mnuchin (US Secretary of the Treasury), Philip Hammond (UK Chancellor of the Exchequer) and Ángel Gurría (OECD Secretary-General). This year’s meeting mainly focused on further improvement of the international taxation system, including tax challenges arising from digitalization as well as the issues of tax avoidance and evasion.

In her contribution, Sitharaman mainly spoke on taxation-related issues, but also briefly addressed the need for increased international cooperation regarding economic offenders who seek refuge in other countries. According to the Indian Minister, citizenship by investment programmes can help fugitives to escape from prosecution and therefore, there is a need “[…] to deal with such practices”. She also stated that “closer collaboration and coordinated action” was required in this respect.

Although cases of misuse seem to be relatively rare, they attract a considerable amount of media attention due to their sensational nature. It is thought that Sitharaman was specifically referring to the case of Mehul Choksi, who became a suspect of the Punjab National Bank fraud case in June 2018. Several months earlier, Choksi had obtained Antiguan citizenship, where he is currently a resident. This has led to an outcry from the Indian authorities, although Antigua has defended itself by stating that it conducted a due diligence screening at the time of application and that there were no objections against the grant of citizenship at that moment in time.

The citizenship status of Choksi is currently unclear, as Antigua has stated that Choksi is deemed to have lost Indian citizenship due to India’s prohibition of dual citizenship. Antigua therefore considers that Choksi’s Antiguan citizenship cannot be revoked, as Choksi would subsequently become stateless. Although this stance seems to be correct, India has denied this and has stated that it still perceives Choksi as an Indian citizen. Currently, there is an Indian extradition request pending at the Antiguan court.

Although Sitharaman’s remarks on CBI programmes were not the core issue discussed during the G20 meeting and did not appear in the meeting’s press communiqué afterwards, they are yet another example of the mounting international pressure regarding investment migration. The continuous improvement of due diligence standards and willingness to engage in dialogue and collaboration should therefore remain key concerns for all players in the field.

Author: Luuk van der Baaren