In his defamation case against caravan magazine, Vivek Doval was cross-questioned about links to a firm named in the ‘Paradise Papers’. He denied knowing cayman islands is a tax haven

National Security Advisor Ajit Doval’s son, Vivek Doval, was cross-examined for three consecutive days at the Rouse Avenue District Court House complex last week. This was in connection with his defamation against The Caravan magazine and senior Congress leader Jairam Ramesh.

At 2 pm on July 30, a suit-and-tie Doval was back in the witness box in Additional Chief Metropolitan Magistrate (ACMM) Samar Vishal’s courtroom. He was standing, hands folded and fingers entwined, looking into the distance through the tinted window, waiting for the judge to enter. The rest of the room remained seated.

The Caravan had published an article on January 16, 2019, titled “The D-companies” with the kicker “Ajit Doval’s sons run a  web of companies including a Cayman Islands hedge fund even as father demands crackdown on tax havens.” The article has Kaushal Shroff’s byline.

Doval took his seat soon after the judge had settled down. And the cross-examination picked up from where it was left off the previous day.

On Hedge fund

When asked how do you qualify to run a hedge fund, Doval said: “All of life’s experience including professional and academic qualifications has enabled me to be a good investor. That is the basis of a successful career in hedge funds, across. There is no particular academic qualifications which allow anybody or me to operate a hedge fund.” Doval added that he has 16 years of experience and has handled portfolios involving assets worth $1.8 billion to $2 billion. “In a profession in which the outcomes are uncertain, such as fund management, fund managers like myself consider several macro and micro factors in evaluating,” replied Doval.

Asked if he has knowledge of accounts, balance sheets, profit and loss accounts, Doval said he is not an accountant. He has working knowledge of the major financial reports though.

Doval’s counsel intervened arguing how is the qualification of a person important in a defamation case, it’s a defamation case, Defence counsel countered: Chauhan “It was a case of reputation…so it is relevant.”

“Are you aware of the concepts of income tax, corporate tax and capital gains tax?”, the defence counsel asked.

“Absolutely yes’’, Doval said

Before the registration of GNY Asia fund at the Cayman Islands, did you, as a prudent financial expert/analyst, try to ascertain the rate of income tax, corporate tax, and capital gains tax, as applicable in Caymans Islands?”

Doval replied: “No, I didn’t. However, the reason for registering the fund in the Cayman Islands was premised on where other majority of hedge funds get registered, as opposed to any material tax benefits/tax factors that were provided there. In hindsight…forget it.”

Chauhan then asked Doval whether he had taken the same measures after the registration of GNY Asia fund.

“No, I didn’t,” replied Doval. “For the same reasons,” added his counsel.

Chauhan vehemently shook his head and said (to Doval’s counsel): “No, you should not do this…”

Doval continued: “This has never been a consideration that I have factored in before or after the launch of the fund.”

Chauhan suggested: “It is wrong to suggest that I have falsely deposed that I did not try to ascertain the rate of income tax, corporate tax, and capital gains tax, as applicable in the Cayman Islands, as I am aware that no capital gains tax, corporate tax, and income tax is levied at the Cayman Islands.”

Doval replied: “At the inception, or rather, before the launch of the fund and after the launch of the fund, I had no idea that the Cayman Islands did not levy income tax, capital gains tax and corporate tax.”

He voluntarily added: “Now, having said that, the relevant factor in launching the fund was being aware that the geographies in which the fund invested, (they) did apply capital gains tax and income tax on their investments…so these proceeds were taxed.”

Doval further said: “Also to note, I am not a tax expert. Just like the legal profession is a specialised profession, the finance profession has several lines—of which investment in public markets is one, and taxation is another.”

“Did your fund ever make profits?”Chauhan asked Doval.

“Yes.”

“Did GNY Asia fund ever pay income tax, corporate tax, or capital gains tax on the profits of the GNY Asia fund, to the Cayman Islands government?”

“The GNY Asia fund made profits at several periods and on a regular basis paid capital gains tax…in the jurisdiction in which it was investing.”

“You haven’t answered my question,” said Chauhan.

Doval swiftly replied: “Let me.” “Given there were so many taxes that the fund was paying in various geographies, I genuinely was unaware of taxes, if payable, in the Cayman Islands,” he added.

Chauhan continued with his questioning. “Who was maintaining accounts of the fund at the Cayman Islands?”

Doval responded: “The accounts for the fund are maintained by the administrator which in the case of the GNY Asia fund was Wells Fargo (now called SS&C). The accounts were subsequently audited by Price Waterhouse Cooper.”

“Now, you had spoken about having attended a certain Edelweiss conference wherein you were training young trainees, rather one, Akul Jhajharia. Would it be correct to say that in the Edelweiss conference held in Mumbai on February 8, 2017, the GNY Asia fund was represented by Mr Akul Jhajharia? You might have attended the conference but the fund was represented by him (Jhajharia).” Doval replied: “It is incorrect.” He volunteered: “The fund had to be represented by an experienced fund manager or analyst.”

Chauhan pulled out a document and handed it over the court. The same document was put to Doval. It was a letter from the website of Axis Bank which showed that Akul Jhajharia was the participant on behalf of GNY Asia fund at the Edelweiss conference held in Mumbai on February 8, 2017.

Chauhan drew Doval’s attention to a paragraph of the Caravan article that read “date on companies registered in the UK, which The Caravan accessed, shows 120 companies registered at GNY Capital’s new address.”

“Is it factually correct?” Chauhan asked Doval. “While I cannot verify the exact number of companies registered at that address, it is only normal for very small businesses in the UK to use their accountant’s address for a variety of corresponding purposes. The accountants in the UK allow for this service.”

Doval was shown another printout, which has been obtained from the official website of the Companies House in the UK. It shows that 120 companies were registered at 12 Gateway Mews.

““Can you tell if any of your family members own a flat in a complex called Unitech Horizon in Greater Noida?” asked Chauhan.

“There is a flat in Unitech Horizon in Greater Noida, which, to the best of my memory, is jointly owned by my father and myself. However, it should also be noted that this flat had been bought long back, perhaps in the time-frame of 2010-11 approximately.”

Chauhan continued. “Can you tell as to when it (the flat) was registered in the joint name of you and your father?”

“If I jog my memory, it was perhaps in early 2017,” said Doval.

Chauhan ushered him to see the Caravan article once again.

“The next paragraph says, ‘media reports indicate that Vivek Doval was in Noida in mid-January 2017, along with his father, the NSA Ajit Doval. Vivek arrived at a registry office in Noida to complete ownership formalities of a flat purchased in his name of a complex called Unitech Horizon’. Is this factually correct?”

The cross-examination will continue on September 3 and 4.

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