In GMR’s global web, how Cyprus thread connected offshore entities

For Crossbridge’s $180 million loan, GMR Infrastructure (Cyprus) Ltd or GICL provided security in the form of a lien over its deposits in Eurobank, the documents show.

Interzone, however, could not repay Crossbridge itself, since it did not have a bank account of its own. Hence, it asked GMR Holdings (Mauritius), an offshore entity controlled by GMR Infratech Private Ltd, to repay the loans. It is not clear from the documents if Interzone eventually paid back GMR Holdings (Mauritius). The end use of these funds by Interzone Capital is not clear in the documents.

GMR Infratech Private Ltd and GMR Infrastructure Ltd are two group entities registered in India through which GMR Enterprise — a major shareholder in the GMR Group’s flagship GMR Airports Infrastructure — controls a string of 13 entities in half-a-dozen tax havens including Mauritius, Cyprus and the British Virgin Islands (BVI). Many of these offshore entities have been liquidated over the last 2-3 years or are in the process of winding up, the documents show.

Responding to a questionnaire, a GMR Group spokesperson said, “On divestment of our stake in an energy company based out of the USA, part of balance capital was kept in the Euro Bank account of GMR Infra Cyprus (US$ 140 million). These funds were blocked by that government due to capital controls imposed by the country in March, 2013.”

The spokesperson further said, both Crossridge and Interzone were wound-up along with many other overseas companies as part of a prudent review mechanism to rationalise the corporate structure.

It also acknowledged that the group did set up a few companies in other jurisdictions for purposes including tax efficiency. “We set up a few companies in various overseas jurisdictions to meet the operational requirements, tax efficiency, ease of investment based on the expert advice of the best international consultants and as per the practice followed by several corporates. ICIJ query on this aspect was adequately addressed by us earlier in the year 2017. All above information was very well discussed in the Board meetings appropriately and disclosed in the Balance sheets. All the overseas companies were reported to regulatory authorities both in India including RBI and abroad as appropriate,” the spokesperson said.

Along with the $180 million loan, Eurobank Cyprus also provided $50 million in revolving credit to Crossridge Investment in 2017; this reduced to $40 million in 2018, and dropped further in the coming years. These were also covered by the lien over deposits offered by GICL.

The GMR Group decided to wind up the operations of its entities incorporated in Cyprus. In April 2021, the board of GICL resolved that the company’s activities will cease, and the procedure of winding up will be initiated with immediate effect. In June 2021, a letter written by Prakash Diwan of GMR Airports (Singapore) said winding up of GICL, GECL (GMR Energy Cyprus Limited) — another company incorporated in Cyprus — and Crossridge were at an advanced stage.

To move ahead with the liquidation of its Cyprus and other offshore entities, the GMR Group initiated a series of financial transactions in 2021 and 2022 between group entities across tax jurisdictions. Directing a PwC Cyprus official, GMR Group’s G Butchi Raju said GMR Holdings (Mauritius) should transfer funds to the tune of $10 million to Crossridge as part repayment of loan taken by Interzone. It also directed that fixed deposits of GICL be pre-closed and funds transferred to GMR Holdings (Mauritius) Ltd.

This is not the first time that ICIJ documents have revealed GMR Group’s offshore dealings. In November 2017, The Indian Express had reported in Paradise Papers about the 28 offshore companies set up by the group — from Mauritius to Malta — to drive its expansion. The group had created a web of companies that involved setting up at least 28 entities across 10 jurisdictions, including Mauritius, the Isle of Man, Spain, Singapore and Malta. These entities were then structured as step-down subsidiaries of GMR Holdings Private Ltd (India).

Giant company incorporator Appleby documents had then revealed that GMR Group also executed or sought execution of transactions from the Bermuda law firm that would allegedly help it avoid tax; convert inter-company loans across jurisdictions into compulsory convertible debentures to avoid transfer pricing issues; and, in several instances, change the nature of funds (debt to equity and vice-versa) when they were transferred from a subsidiary in one jurisdiction to another.