Lagatar24 Desk
Port Vila: The government of Vanuatu, a Pacific island nation, has cancelled the passport of IPL founder Lalit Modi, stating that escaping extradition does not qualify as a legitimate reason for citizenship. Modi, who is wanted in India for financial irregularities, had earlier sought to surrender his Indian passport at the Indian High Commission in London.
The decision was made after Vanuatu’s Prime Minister Jotham Napat directed the Citizenship Commission to revoke Modi’s passport following international media reports highlighting concerns about his citizenship.
Where is Vanuatu?
Vanuatu is a South Pacific island nation, located about 1,750 km east of northern Australia. It is southeast of the Solomon Islands, northeast of New Caledonia, and west of Fiji. The archipelago consists of 83 islands arranged in a Y-shaped formation, covering a distance of 650 km.
The capital city, Port Vila, is situated on Efate Island and serves as the country’s economic and political hub. Vanuatu gained independence in 1980 after being jointly administered by Britain and France. Its economy largely depends on tourism, agriculture (copra, beef, kava, cocoa), and offshore financial services.
Is Vanuatu a Tax Haven?
Yes, Vanuatu is considered a tax haven due to its lack of income tax, withholding tax, capital gains tax, inheritance tax, or exchange controls. This tax-free status has attracted offshore businesses but also drawn scrutiny from global financial regulators.
In the 1970s, Vanuatu’s offshore finance industry boomed due to global deregulation. However, financial crimes such as money laundering, drug trafficking, and arms smuggling led to increased scrutiny.
The Financial Action Task Force (FATF) placed Vanuatu on its “grey list” for weak anti-money laundering measures, isolating its banking sector. The 2017 Paradise Papers leak further exposed its links to hidden offshore wealth.
Vanuatu’s Response to Being Labelled a Tax Haven
To address global concerns, Vanuatu introduced stricter financial laws, forcing many offshore banks to shut down. However, some local anti-corruption activists argue that other countries provide even more secrecy than Vanuatu.
Marie Noelle Ferrieux-Patterson, head of Transparency International Vanuatu, claims that some US states offer greater financial anonymity than Vanuatu.
Despite agreeing to stricter tax rules under the Organisation for Economic Cooperation and Development (OECD), Vanuatu remains under review for compliance with global financial transparency norms.
Vanuatu’s History with Financial Controversies
Vanuatu has a long history of financial controversies. In 2001, former Prime Minister Barak Sope was charged with forgery over unauthorized financial guarantees worth $23 million–$100 million to Indian businessman Amarendra Nath Ghosh.
The scandal led to Sope’s removal from office and an official investigation by his successor, Edward Natapei. Vanuatu’s financial reputation suffered, and the country even withdrew from WTO accession talks due to international concerns over its financial practices.
