Monday, July 4th, 2022 02:33:45

Need To Reclaim The Black Hole Of Black Money

Updated: June 18, 2011 11:27 am

When in the first week of February 2011, an Indian news magazine and a TV channel released a list of 15 individuals and trusts allegedly holding secret accounts in the tax haven of Lichtenstein, it appeared that the days of black money hoarders in India are numbered. But this optimism has proved to be short-lived. Four months have gone by since that list was released, and still the corrupt Indians are merrily operating below the radar screens of the law enforcement agencies.

The list was handed over to the Indian government in March 2009, and the Centre had taken the stand that the names could not be disclosed because these had been given by the German government on confidential terms. The list released by the two Indian media outfits had the names of 12 individuals and three foundations without giving their addresses, businesses and the amounts they have allegedly stashed in these accounts.

Though the list did not have any politicians’ names, Kochi IPL co-owners, the Mehta brothers, also figure in the list. The names of 12 individuals and three trusts in this list of 15 are as follows: 1. Manoj Dhupelia; 2. Rupal Dhupelia; 3. Mohan Dhupelia; 4. Hasmukh Gandhi; 5. Chintan Gandhi; 6. Dilip Mehta; 7. Arun Mehta; 8. Arun Kochar; 9. Gunwanti Mehta; 10. Rajnikant Mehta; 11. Prabodh Mehta; 12. Ashok Jaipuria; 13. Raj Foundation; 14. Urvashi Foundation; 15. Ambrunova Trust.

Now, once again things appear to be changing for good as the government is showing signs of cracking the whip on its corrupt citizens. Trust the politicians to skirt issues of national importance like the issue of black money and then suddenly act when they come under pressure. These pressures can come from various quarters such as media, Opposition leaders, courts or the civil society. However, if the UPA II government seems to have finally woken up from its years of slumber, it is because of the last of the pressure groups cited above—the civil society.

At a time when the Supreme Court is pursuing the issue of black money pro-actively in view of Hassan Ali (India’s largest tax evader, who is estimated to owe taxes to the Indian government anywhere between $2 billion to $20 billion) and other cases—guesstimates of black money in India vary from $500 billion to $1.4 trillion—the UPA II government has commissioned an in-depth and fresh study estimation of unaccounted income and wealth held within and outside India.

Even as the issue of black money has generated a lot of political heat and attracted public and media attention in the recent past, there are no reliable estimates of black money generated and held within and outside the country. A recent study by Global Financial Integrity has estimated the illicit money outflow to be $462 billion. These estimates are based on various unverifiable assumptions and approximations.

The study, engaging three top national-level institutions, has already begun in March 2011 and is scheduled to be completed in 18 months. This means that the results of the study will be available only around September 2012, months after crucial assembly elections in several states, including the all-important Uttar Pradesh assembly.

The government’s decision to suddenly announce on May 29, 2011, the commissioning of a comprehensive study to gauge the quantum of black money stashed away by corrupt Indians within and outside the country, is a clever political move aimed at taking the wind out of yoga guru Baba Ramdev’s sails—who has threatened to do a Jantar Mantar on the issue of black money from June 4. Ramdev has threatened to begin a fast unto death from June 4, 2011, if the government failed to take any concrete steps till then. Chastened by Anna Hazare’s recent fast unto death at the national capital’s iconic Jantar Mantar on the issue of corruption, the government could obviously ill afford to have another-high voltage agitation by another high-profile person from the civil society.

The government was forced on the back foot by Ramdev’s threat and decided to announce the study, now which it says began in March 2011. A day before the government made public the existence of a study on all aspects of black money, it set up a Committee, headed by Chairman of the Central Board of Direct Taxes, to examine ways to strengthen laws to curb the generation of black money and its transfer to safe havens abroad and to bring the money back into India’s legitimate financial system. The Committee has been given six months’ time to finalise its report. The government was left with no option but to announce the two-month-old existence of a study commissioned by the Ministry of Finance after Ramdev—who was recently briefed by senior government officials on the legal constraints in bringing back the black money parked abroad—refused to accept the government’s arguments.

The UPA government’s difficulties were accentuated in April 2011, when WikiLeaks founder Julian Assange went on record saying that “There is more Indian money in Swiss banks than any other nationality”. He disclosed that he has access to the Swiss bank details about Indian nationals, who have stashed foreign money in Swiss-controlled banks all over the world. “Yes, there are Indian names in the list,” he said and added that Indians had deposited black money worth billions of dollars in foreign locations, thus causing a cascading impact on the Indian economy. “The Indian government needs to be more aggressive in tracking the black money stashed in foreign banks, since Indians depositing money in foreign banks is debasing the rupee,” he said in this on-record interview to an Indian media outfit. “The Indian government’s response to the disclosures made by us has been the worst in the whole world. The Indian government has been clearly attempting to mislead the people of India. I have been told the PM Singh is not corrupt, but his intention so far in tracing the black money stashed abroad has been very disappointing,” Assange said.

On April 22, 2011, the union finance ministry said in response to an RTI query that it has “no authentic figures” about the quantum of money deposited in Swiss banks. The ministry also said that certain “references” have been received on the black money issue, but declined to make the information public since it will “impede the process of investigation” as the case is being heard in the apex court. “There are no authentic figures about the amount of deposits held by Indian citizens in Swiss banks, which are exclusive of their lawful and legitimate deposits,” the ministry said. It also cited legal difficulties being faced by India with the Switzerland government, when the Government of India approached the Swiss authorities with specific information about certain individuals. “The Swiss Federal Tax Administration has expressed its inability to exchange the information regarding bank deposits of Indian citizens, as the information was not necessary for the application of the DTAA (Double Taxation Avoidance Agreement) between India and Swiss Confederation, but was required only for the enforcement of India internal laws,” the finance ministry said in the RTI reply.

A day before this, the Supreme Court had taken a very strong view of the government’s inefficiency in dealing with the issue of black money and focussing its probe only on Hasan Ali—owner of Pune-based stud farm, accused of money laundering and large-scale tax evasion. “Was the government sleeping all these years on the issue of black money,” the Court had asked while hearing a petition filed by noted lawyer Ram Jethmalani, and others seeking direction to the government to bring back black money stashed by Indian citizens in foreign banks which is believed to be around USD one trillion. The Supreme Court pulled up the government for withholding information on black money stashed in foreign banks, saying it was not just limited to tax evasion but was a “mind boggling crime”, amounting to “theft” and “plunder” of national wealth having security ramifications.

Political parties too have exerted enormous pressure on the government for its sins of omission and commission in tracking corrupt Indians’ ill-gotten wealth stashed away in foreign tax havens. CPI (M) leader Sitaram Yechury said: “Government should not only obtain full details of these accounts, but also make the names of the account-holders public and bring the money back to the country for investment in social projects.” CPI General Secretary AB Bardhan went on record saying: “What is the secrecy about black money? Why are they not revealing the names? Why are they keeping them (names) under sealed cover? We want to know who they are.” He had said that those who had kept money stashed in Swiss bank accounts had done so to evade taxes. “They are tax evaders. They have committed a crime. The fund should be confiscated.”

The BJP for its part has been scoring political goals against the UPA government on the issue of black money. On March 26, 2011, BJP vice-president, in charge of West Bengal, Mukhtar Abbas Naqvi remarked in Kolkata during the assembly election campaign: “The Congress and its allies are flowing out black money like water. They are converting ‘corruption currency’ into ‘campaign currency’. Election Commission should take suo motu action. We will also complain to the EC if necessary.’’

The problem with India is not lack of legislations. On the contrary, there is a plethora of legislations for virtually every illegal activity. The problem with India has been lack of good governance and complete absence of political will while dealing with issues of national importance. The issue of black money is extremely important and any government that means business must put it on top of its agenda. Those who have raped and plundered India for decades deserve a place in jail, and their ill-gotten wealth must be confiscated and pooled back into the national kitty for developmental activities. Imagine what a poor country like India can be overnight if the estimated $1.4 trillion, larger than the country’s current GDP, is brought back and distributed among all states and union territories rationally for developmental projects with a strict and effective oversight system.

There is an urgent need for India to reclaim the black hole of black money. The leader who does it will be the true and the tallest Bharat Ratna India has ever produced. India can do it. India must do it.

By Rajeev Sharma

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