By Kiran Somvanshi
The British capital has always been a big draw for Indians, and not just the touristy kind. It’s where Vijay Mallya recently went to get away from it all, especially what he described as a “near-hysterical” media campaign.
Indeed, he had to issue a press release from the UK to make clear he was not a fugitive of any kind and that he was in fact engaged with the banks in trying to sort out the small matter of Rs 9,000 crore in dues. Still, he does face the task of clearing his name over accusations of wrongdoing by various Indian investigative agencies.
London does have the distinction, dubious or otherwise, of being a destination for those who may have their difficulties with authorities back home. A number of Russian dissidents, some of them quite wealthy, are based there because their relationship with Vladmir Putin isn’t at its best right now. Among the Indians, Lalit Modi is one who’s found a secure base in the country while staying in the news through occasional forays into social media.
The UK offers robust protection against extradition laws and strong human rights safeguards, besides which there’s easy access to Europe. To be sure, that also allows those facing serious accusations of wrongdoing to find safe haven in the country.
Entry into the UK, buying property and settling down there is easy for rich Indians. A super priority visa service offered by the UK Home Office provides permits within 24 hours to business and urgent travellers. An entrepreneur visa requires an investment of £200,000 (Rs 2 crore).
A passive investment of £2 million gets you an investor visa. These visas are initially valid for three years, with scope for extensions. They could eventually lead to permanent residence in the UK or ‘indefinite leave to remain’, while being a citizen of another country. Besides, the UK is stable and it has a tolerant society.
“Being headquartered in London, the rest of the EU becomes accessible. The flexible and benign tax structure also makes it an attractive destination for HNIs (high net worth individuals),” said Londonbased barrister Nazar Mohammad of Legis Chambers.
It is nearer to India than the US and has a large Asian community, he added.
An estimated 3,000 Indian families own luxury properties in Mayfair, a tony location in London, having typically spent between 1million and 20 million pounds on buying an apartment or penthouse.
“Indian HNIs have for long preferred London as their second home for various reasons – a stable economy, clarity of rules and regulations, growing property market, excellent educational options in UK universities, diversifying of assets and risk portfolio,” said Chandru Iyer, international business development director of London-based chartered accountants firm Kingston Smith.
Last year, the UK national risk assessment of money laundering and terrorist financing found that the size and complexity of the UK financial sector makes it more exposed to criminality than those in many other countries, including abuse enabled by professionals in the legal, banking and accounting sectors.
In a 2015 report on how corrupt capital is used to buy property in the UK, Transparency International revealed that secret offshore shell companies are a common way for moving illicit money around the world.
The corrupt are helped in buying properties by lawyers, accountants and estate agents who do not ask where the money comes from. According to the report, 75% of UK properties that are currently being investigated because of corruption are registered in secret safe havens. “It is not that the access to the UK is unfettered, but there is no proactive government action to control tainted money from entering the country. A policy may exist in the statute but its enforcement and application with respect to HNIs is questionable,” said Mohammad of Legis.
According to Transparency International, the UK needs to do more to ensure that its overseas territories aren’t used as safe havens for illicit wealth. In many of these territories – such as Jersey, British Virgin Islands and Cayman Islands – legal systems create a veil of secrecy that obscures the identity of those who set up companies, usually for the benefit and use of non-residents. UK laws related to extradition also come to the rescue of those who have had a brush with the law in their home country.
The UK legal system has provisions, which if applicable, can defeat extradition. Besides, a person can be extradited only if the offence for which extradition is sought is deemed a crime in both the requesting and requested states.
The Human Rights Act in the UK protects the 15 fundamental freedoms for every resident in the country. While there’s no general bar on deportation of foreign nationals, the absolute prohibition on torture prevents countries such as the UK from sending people anywhere where they will be tortured.
There is an extradition treaty between India and the UK, but the process is bureaucratic and allows an extradited person to file an appeal on grounds of human rights. However, it does not mean that rich criminals can make a beeline for the UK.
“London, like any other major financial capital, is full of accountants who can help you avoid tax, immigration and human rights lawyers who can help you avoid deportation, but no more so than any of the other countries,” said a London-based financial consultant on condition of anonymity.
The difference between London and, say, Dubai or New York, is that the UAE authorities and even those in the US are more willing to take extra judicial measures, while in here, it is almost always transparent and strictly by the book, he added. The ruling conservative government in the UK is keen on cutting down the largesse. In 2014, the UK government doubled the minimum investment for an investor visa to 2 million pounds. It has become increasingly difficult to enter the UK taking the entrepreneur visa route. The current rejection rate is about 70%, with most applicants failing the ‘genuine entrepreneur test.’
There have also been wide-ranging extradition reforms – with changes made in the law that will prevent people frustrating the process by ensuring that only genuine appeals are heard.