P VAIDYANATHAN IYER
NEW DELHI: The Hinduja Group, with revenues of over $25 billion and employing 100,000-plus people, effectively utilised a “trust” structure and its opaqueness to waive over $78 million in debt to a group holding company despite the trustees pointing out that the act would benefit the Hinduja family members, Appleby records show.
Initially hesitant to sign off on the holding company’s accounts, the trustees, eventually, agreed after extracting an indemnity bond from Prakash Hinduja protecting them from any future damages. Legal advice stating that the waiver of the debt would not be construed as an aggressive tax-avoidance scheme was also furnished to the trustees.
Records show that documentation of the loan was created between June 30, 2007 and December 3, 2007. Appleby had pointed out, records investigated by The Indian Express show, that once the loan was waived by the Hinduja family trust called The Acorn Trust, the holding company, headquartered in Luxembourg, AMAS Holding SPF, would recognise the profit in its financial statements.
This profit would be available to be distributed to the shareholders. AMAS Holding’s entire shareholding is with The Acorn Trust whose beneficiaries are the Hinduja family.
In the case of Hinduja Group, Appleby worked during 2014-15 to replace Jersey-based Rozel Trustees (Channel Islands) Limited and Novatrust Ltd as the trustee for The Acorn Trust. This information came to light because the takeover got delayed and “frustrating” for the Hinduja Group, with existing trustees creating a demand for an indemnity for the loan waiver. In email exchanges, both the Hinduja Group and Appleby guess this might have been the case as they to expedite the process.
The Hinduja Group, with revenues of over $25 billion and employing 100,000-plus people, effectively utilised a “trust” structure and its opaqueness to waive over $78 million in debt to a group holding company despite the trustees pointing out that the act would benefit the Hinduja family members, Appleby records show.
Initially hesitant to sign off on the holding company’s accounts, the trustees, eventually, agreed after extracting an indemnity bond from Prakash Hinduja protecting them from any future damages. Legal advice stating that the waiver of the debt would not be construed as an aggressive tax-avoidance scheme was also furnished to the trustees.
Records show that documentation of the loan was created between June 30, 2007 and December 3, 2007. Appleby had pointed out, records investigated by The Indian Express show, that once the loan was waived by the Hinduja family trust called The Acorn Trust, the holding company, headquartered in Luxembourg, AMAS Holding SPF, would recognise the profit in its financial statements.
This profit would be available to be distributed to the shareholders. AMAS Holding’s entire shareholding is with The Acorn Trust whose beneficiaries are the Hinduja family.
In the case of Hinduja Group, Appleby worked during 2014-15 to replace Jersey-based Rozel Trustees (Channel Islands) Limited and Novatrust Ltd as the trustee for The Acorn Trust. This information came to light because the takeover got delayed and “frustrating” for the Hinduja Group, with existing trustees creating a demand for an indemnity for the loan waiver. In email exchanges, both the Hinduja Group and Appleby guess this might have been the case as they to expedite the process.
A Liechtenstein foundation, Protectus Anstalt, is the Protector of the Trust. The Trustees are Rozel Trustees (Channel Islands) Limited. The Trust’s only unlisted investment is in AMAS Holding SPF, which is fully subscribed to by the trust. The Acorn Trust holds 10,000 shares of CHF 400 each, amounting to $346,330 at cost. It has $124.41 million in the capital account, also termed as ‘Beneficiaries Funds’.
Records show that Prakash Hinduja, born in Mumbai, is a Swiss national, but a Monaco tax resident. Srichand and Gopichand are UK citizens, and Ashok is an Indian citizen. There is huge to-and-fro within the Appleby compliance team about the status of the Hinduja brothers, but eventually, they settle to term the whole family as PEPs (Politically Exposed Persons). Records show the holding structure of the group’s flagship in India — Ashok Leyland Ltd, the country’s second largest commercial vehicle manufacturer after Tata Motors. It also has other interests in sectors such as oil, power, banking and finance, etc.
The umbrella investment company for all its Indian ventures is also AMAS Holding SPF. SPF essentially is in the nature of a Private Asset Management Company. SPFs can hold financial investments – shares, bonds and derivative instruments. They cannot take part in commercial transactions.
SPFs obviously have huge tax advantages. They do not pay corporation tax, municipal tax or wealth tax. Further, they do not have to pay capital gains tax or withholding tax on interest payments.
There is no clear picture about the value of the entire investments or holdings of AMAS Holding SPF. AMAS Holding SPF holds 100 per cent of Machen Development Corporation, a Panamanian entity, which in turn holds 100 per cent of N.N.Investments B.V., a Netherlands company.
Both these companies, too, are holding/ investment companies, with no other commercial activity. The shareholding of Machen Development Corporation is 100 shares which were transferred to AMAS Holding SPF of Luxembourg on April 22, 2014. MDC initially had ‘Bearer’ shares allotted on March 3, 1986.
The second mega layer in the The Acorn Trust super-structure is Gulf Oil International Ltd (GOIL), another holding company in Cayman Islands. The shareholding in GOIL is split between AMAS Holding SPF (56.4%) and N.N.Investments (43.6%). All the Gulf Oil brand companies across the world including India, UK, Middle East — except the US, where the Hindujas sold Gulf Oil to Chevron a while ago – seem to be under this Cayman Islands company.
