In the latest hearing on Vivek Doval’s defamation suit against The Caravan magazine, a key witness, Amit Sharma, was cross-examined in the court of Delhi’s Additional Metropolitan Magistrate Vishal Pahuja on Thursday. 

Sharma had earlier testified on October 17 and accused the magazine of publishing “incorrect facts and insinuations”. Sharma was co-founder of Doval’s hedge fund which is at the heart of the case. In January 2019, The Caravan reported that Doval, son of India’s national security advisor, Ajit Doval, ran the hedge fund, GNY Asia, from the tax haven of the Cayman Islands. In response, Doval filed a criminal defamation suit against the reporter Kaushal Shroff, the magazine’s editor Paresh Nath, and Congress leader Jairam Ramesh. 

Ramesh had held a press conference, where he echoed The Caravan story to accuse Doval junior of corruption. In his suit, Doval claims the three people caused “irreparable damage” to his reputation “through calculated insinuations and innuendos”. Doval testified in the case in early September. 

On Thursday, Sharma was cross-examined by Sarim Naved and Bhavook Chauhan, counsel for The Caravan.

Naved started the questioning.

“Since when have you been in England?” he asked Sharma.

“Since 2002,” Sharma replied.

“When did you become a citizen?”

“In 2008.”

“Your company did not issue any public statement after the article was published?”

“No, my company GNY Ltd didn’t issue any statement. There were a lot of conversations with investors and potential investors post the publication of the article and the press conference but no written communication was made from my end.”

Naved then asked whether Sharma knew that the Cayman Islands was a tax haven. 

“I do not specialise in tax related stuff, but as far as I understand the Cayman Islands has low taxes for certain financial products and companies,” Sharma replied.

“Sir, are you aware that the former US president Barack Obama had noted that just one building in the Cayman Islands housed 12,000 corporations and he called it the ‘biggest tax scam in the world’?”

“I’m not aware.”

“Are you aware the Cayman Islands was mentioned in the Panama Papers and the Paradise Papers related to money laundering cases?”

“I’m aware of the Panama Papers but not of the Paradise Papers.”

“Do you know what the Panama Papers were about?”

“Not fully aware.”

“Are you aware about Sebi barring foreign portfolio investors based in the Cayman Islands from investing in India since Oct 2019?” Naved questioned, referring to the Securities and Exchange Board of India.

Sharma replied in the negative. He had the same response to a series of questions about whether he knew that vast sums of black money had been funneled into India from the Cayman Islands.

He then added, “I’m a bit uncomfortable with these questions.”

Naved then turned to examining Sharma’s ties with Doval junior.

“Is it correct to say Mr Vivek Doval’s father was the National Security Advisor on the date of the press conference?” the lawyer asked, referring to Ramesh’s January presser.

“Yes,” Sharma confirmed.

“Are you aware Ajit Doval co-authored a report on black money in India in 2011 with the title ‘Indian Black Money Abroad in Secret Banks and Tax Havens?’

“Not aware.”

“Is it correct that Don W Ebanks was the director of GNY Asia fund?”

“Yes.”

“Is it correct that his name was there in the Paradise Papers investigation?”

“No, I am not aware.”

“Are you aware of Jay Shah, Dushyant Singh, Anurag Thakur?” Naved asked referring, respectively, to the sons of Home Minister Amit Shah, former Rajasthan chief minister Vasundhara Raje, and India’s incumbent Minister of State for Finance and Corporate Affairs.

“I have heard of Mr Jay Shah but not the rest of the names.”

“Are you aware that all of them were referred to in the press conference?”

“I don’t remember.”

“As far as you are concerned, do these persons have a good reputation in society?”

“I can’t say these four persons enjoy a good reputation in society.”

Here, the judge interjected, “Well, if he has not head of them, how can he say whether they have a good reputation or not?”

Then, it was the turn of the other lawyer, Chauhan, to question Sharma.

“When did you read the article for the first time?” he asked.

“I read it first in January 2016,” Sharma replied.

“When did you have a discussion with Vivek Doval for the first time?”

“Post the press conference.”

Chauhan repeated Naved’s question about Ajit Doval co-authoring a report on black money and pressed Sharma about it, showing him The Caravan story, which mentions this fact.

“Yes, I remember that Mr Vivek Doval’s father had co-authored the report,” Sharma conceded.

“Have you discussed this report with Vivek Doval?”

He hadn’t, Sharma said.

“Did you try to?” Chauhan pressed.

Again, Sharma replied in the negative. 

“Would it be correct to say that to opt for a jurisdiction which charges lesser taxes was a preferable choice for your fund in order to maximise the profits?”

“Partly correct. Choosing jurisdiction with lower taxes was one of the criteria but there were other criteria, including the ecosystem of the service provider, cost advantages and being one of the preferred locations for an international fund.”

“So, was it you or Vivek Doval who figured out that the Cayman Islands would charge lesser taxes?”

“Neither of us.”

“Is it your case that neither you nor Mr Vivek Doval tried to ascertain the tax rate being charged in the Cayman Islands?”

“I can state on my behalf only. I was generally aware about lower charges in the Caymans.” 

“Can you tell us if GNY Asia fund ever paid income tax?”

“I cannot say that income tax was paid by GNY Asia fund. That was dealt with by Gordian Capital.”

“As prudent financial investors, you never deemed to enquire from Gordian Capital about the payment of income tax?” Chauhan pressed.

“No.”

“We didn’t carry out any due diligence with the government of the Cayman Islands before setting up the funds there. We were relying on service providers like Gordian Capital for such due diligence.”

“Are you aware that Gordian Capital had carried out any due diligence with the government of the Cayman Islands?”

“I’m not aware.” 

“Can you tell us if Mr Vivek Doval had carried any similar due diligence?”

“I’m not aware.”

“As prudent financial investors, did you not deem it important to follow up with Gordian Capital if they had carried out any due diligence with that government?”

“The Cayman Islands has been used as a jurisdiction for roughly 60% of fund assets. It’s widely recognised and has a good ecosystem of service providers, so I did not deem it important. It was also not part of my job.”

“Whose job was it to follow up with Gordian Capital?” Chauhan asked.

“So, Vivek was the director of GNY Asia fund. He must be the right person to ask Gordian Capital.”

“Are you aware that back in 2017 the Cayman Islands was put on the EU’s grey list of tax havens?”

“I’m not aware.”

Chauhan then asked Sharma a series of questions about the India Foundation, an influential think tank headed by Vivek Doval’s brother Shaurya Doval; Shaurya Doval’s ties to firms called Torch Financial Services and Zeus Capital, and to the Saudi royal  Mishaal bin Abdullah bin Turki bin Abdulaziz Al-Saud.

To most of these questions, he replied in the negative.

Sharma’s cross-examination will continue on Saturday.

Also read: Vivek Doval vs The Caravan: His business partner accuses magazine of publishing ‘incorrect facts’