Questionable BVI company involved in the dispute between Revenue authority and businessman

The two questions that make importance in connection with this case:

• are you making the due diligence on your offshore partner prior entering in the business transaction?
• are you keeping the status of the Good Standing and using the requisites of your offshore company as carefully as of your onshore company?

The case was recently published on the dispute between Uganda Revenue Authority and property magnate Sudhit Ruparelia of Kampala, the capital of Uganda. This dispute just shows clearly the importance of these questions. We will not start the senseless dispute who is right or wrong. I think that in some years we will know who managed to prove his rightfullness but probably we will never know who was right and in what matters.

To start with: there is a continuing dispute between Uganda Revenue Authority (URA) and Kampala property magnate Sudhir Ruparelia concerning the payment of taxes connected with
the activities of offshore companies Meera Investments, Anglo Universal Holdings (presumably the British Virgin Islands offshore company), and Goldstar International (presumably the Gibraltar offshore company). The Uganda Revenue Authority has tried to levy taxes on Meera Investments but Sudhir Ruparelia has counter-claimed the URA for the same amount. He asked the court to grant Meera Investments a permanent injunction preventing the URA from ever issuing any assessment on them. In their turn, the URA has asked Interpol to investigate the source of alleged loans given to Meera by Gibraltar and BVI offshore companies. In the opinion of URA, there may be elements of forgery and fraud involved in the case.

The company Meera Investments has stated that in 1995 and 1996 it received two loans of US$10 million from Anglo Universal Holdings of British Virgin Islands and US$25 million from Goldstar International of Gibraltar. The URA court case is that these loans are fictitious and they rather represent undeclared income liable to 30% income tax as well as penalties and interest. This is based on the fact that loan agreements between Meera Investments and the two above-mentioned companies presented to the URA have some inconsistencies:

• No public record has been found about such companies as Anglo Universal Holdings in the BVI or Goldstar International in Gibraltar. The solicitors who allegedly drew up the agreements also did not know anything about them.
• In such a large transaction, the loans should have been secured on Meera or Sudhir's properties, but they weren't. Also, Meera was not making loan repayments or paying interest on the loans.

Meera Investments presented a letter to Goldstar International stating that their account balance stood at US$1.33 million and dated 1995. This letter was meant to prove the existence of the loan agreement, but now it is being closely examined since the telephone number on the letterhead of the Meera Investments is 341405 while it is known that until 1999 Kampala phone numbers started with "2".

PKF which had audited Meera Investments have told the URA there is no evidence of any loan as well as of any money transfer from abroad.

The story has continued in March 2006 when Meera made its first interest payment to Goldstar International in the amount of $546,000, over 10 years after the loan. The payment was made not directly to a company account but to a firm of lawyers called Trier and Trier Associates in Gibraltar. This payment is investigated by Interpol. The UK Central Authority of the British Home Office examines the international status of Meera Investments. On May 16, 2006 the British High Commission refused to give comments on the reports that the UK Central Authority of the Home Office had also been asked to investigate.

Resume: It is not a problem to find out exactly whether the above-mentioned BVI and Gibraltar offshore companies existed and were in Good Standing in BVI and Gibraltar in 1995 and 1996 respectively. The investigation will certainly reveal these facts. As regards telephone number on the offshore company letterhead – who knows, is it a simple mistake or a typo, or is it a real key to discover the real wrongdoing?

By the way, do you have correct telephone numbers and company details on your company letterhead?