An unknown company from the little-known Cayman Islands has received the green signal from the UPA Government to make a massive investment in construction and renovation of airports in India. The Pioneer daily's investigation has revealed that the company -- Agam SPV Six Limited -- is not registered with Cayman Islands Monetary Authority (CIMA), the financial regulator of the Islands to prevent money laundering and terrorist funding.The US, European Union, International Monetary Fund and United Nation's financial monitoring authorities have made registration to CIMA mandatory for carrying out internal business activities.
On May 1, the Cabinet Committee on Economic Affairs (CCEA) had given clearance to Agam SPV Six Limited of the Cayman Islands to invest $300 million (Rs 1,170 crore) to invest in India for building new airports and renovating the existing ones. The CCEA also allowed it to float a 100 per cent foreign equity company in India in this regard. Cayman Islands is located in Caribbean Islands, considered a tax haven or offshore financial centre, and was blacklisted by international agencies like the US, IMF and the EU in 2001.
The Islands was believed to be a prime centre of money laundering activities and terrorist funding. The notorious Islands has just 50,000 inhabitants, but the number of registered companies is more than 80,000.Anybody can register a company in the Islands by paying just $800. The offer is explicitly shown in the company registrar's website: "Maintenance of anonymity and assurance for 30 years' tax holiday".
But things started changing after the US' war on terror. Pressure and sanctions from international agencies forced the Islands to form a series of legislations against money laundering and terrorist funding and to regulate the money spinning and parking.Under international pressure, in 2004 the regulatory body -- CIMA -- was created to monitor the activities of financial services. As per the agreement with the treasuries of the US and EU, the main function of the CIMA is to licence, monitor and audit the fund flow of the companies registered with it. CIMA registration is mandatory for all Islands-registered companies to operate in the US and the European Union.
The Agam SPV Six Ltd, which got clearance to invest Rs 1170 crore in India, is not registered for doing business with major world community. The Agam SPV Six Ltd's holding company detail is like a puzzle. The company was incorporated as per the rules of Cayman Islands on February 2007, says a Press release by the CCEA. According to it, the said company is a subsidiary of 'The Agam Fund Limited', which in turn is a subsidiary of Sigma Asset Management (Guernsey) Ltd, and located at Guernsey Islands, between the UK and France.Sigma Asset Management is owned by another company in London -- Atlas Capital Associates, which in turn is owned by Atlas Capital Group.
None of the companies has any expertise in the aviation business. Information available with The Pioneer daily shows that only the first holding company, 'The Agam Fund Limited', is registered with CIMA (Licence No 11944, registered as a mutual fund on October 2, 2006), while the Agam SPV Six, which claims to be its subsidiary and which intends to invest Rs 1170 crore in India, is not licenced with CIMA.
When The Pioneer contacted the Finance Ministry of Cayman Islands about the background of Agam SPV Six, they advised that the CIMA website be checked. But the Foreign Investment Promotion Board (FIPB) in New Delhi was reluctant to give any detail about the company. The same was the case with the Finance Ministry. The Pioneer had requested the Finance Secretary, who is also the chairperson of FIPB, to explain the Government's reasons for giving clearance to a non-regulated company. But despite two faxes and a month-long wait, the Finance Secretary has not yet bothered to respond.
[This article was appeared in 'The Pioneer' daily on August 4, 2008. The Writer is Special Correspondent of 'The Pioneer' daily's New Delhi Bureau]