Getting back slush money

How much Indian money is stashed in foreign banks, notably in Switzerland? Assessment varies. One figure mentioned is to the amount of Rs 14,000 crore. The funds held by Indians in banks abroad reportedly rose by 40 per cent during 2013. Data released by Switzerland’s central banking authority – the Swiss National Bank – showed this stashed money amounted to Rs 13,650 crore or 6.5 billion Swiss francs.

The Hans India (24 June) put the figure at Rs 6,92,328 crore. As the paper put it: ‘It is just the tip of the iceberg.’ It said: “The amount is so huge, if it is brought back, the Centre would be able to run successfully without anyone paying taxes for the next twenty years.” According to an earlier figure mentioned by another paper, “a whopping Rs 125 billion of public money has been siphoned off from India by corrupt politicians and officials between 2000 and 2008.” According to the paper, “much of the funds flowing out are generated at home within India and then sent illegally abroad.” Just one Indian businessman, Pune-based Hasan Ali Khan, had declared in October 2011 a mind-boggling figure of Rs 1.10 lakh crore stashed abroad over eight years, a tab less, according to a paper, “than the country’s defence budget for 2009-2010 which was Rs 1,41,700 crore.” Yet another paper quoted the Global Financial Integrity as saying that Indians had salted away about Rs 28 lakh crore in overseas tax havens between 1948 and 2008. Presently, the size of the black money economy is estimated to be one third of the current GDP.

Actually a BJP report in 2011 has estimated India’s black money to be worth between Rs 30 lakh crore and Rs 84 lakh crore. Noted a paper: “These sums, compared to India’s total annual welfare spending of about Rs 3 lakh crore are staggering. If hidden incomes of Rs 25 lakh crore to be disclosed and taxed at 30 per cent, it would generate Rs 8.5 lakh crore, enough to build a 2,000 super specialty hospital in each of India’s 624 districts”. And to that, the paper said: “Alternately, it could offer a ‘zero-tax’ year for all individuals and companies and still enable a sufficient budget that funds all expenses, including salaries and welfare schemes.”

A crackdown on India’s grey economy has long been overdue and the time has come to hold it to account with a firm grip. And this has been recently made possible by the Modi government which announced the setting up of a high-level Special Investigation Team (SIT) under instruction from the Supreme Court. SIT will be headed by former Supreme Court judge, Justice M B Shah, and another retired Supreme Court Judge, Justice Arjit Pasayat, would be its vice-chairman.

SIT will have high profile government officials like Revenue Secretary, Deputy Governor of Reserve Bank of India, Director of Intelligence Bureau, Director of Enforcement Directorate, Director of Central Bureau of Investigation (CBI), Chief of Research and Analyses Wing (RAW), chairman of the Central Board of Direct Taxes and Director of Financial Intelligence as members. Already the Government of India has written strong letter o the Swiss authorities concerned, demanding names of Indian depositors in Swiss banks. The general belief is that the Swiss will not oblige, come what may. SIT has been told to keep the Supreme Court informed about all major developments by filing periodic status reports and to follow special orders that the Court itself may issue from time to time, The SIT, however, has its limitations. This was recently pointed out by a senior advisor to Tax Justice Network, a well-known global organization which has been quoted as saying that the “effectiveness of special investigation teams would depend on both their access to data concerning tax evaders, some of whom might be the political and financial elite.”

Writing in Bharatiya Pragnia (June 2014), Ram Jethmalani has quoted a German magazine (11 November 1991) as saying that Rajiv Gandhi was among 14 Third World politicians who had stashed their booty in Swiss banks. According to Jethmalani, “by now the Sonia family’s inheritance must have swollen to nearly 10 billion dollars.” Writes Jethmalani: “What is more disgraceful is that credible evidence has emerged that many Indian politicians and leaders of the Corporate World and humble benaamidars (cover for real thieves) have stashed away a mind-boggling sum of 1,500 billion dollars in secret foreign accounts equivalent to about 750 lakh crore.” In that same magazine, S Gurumurthy has quoted archives of the Russian spy outfit KGB that the Gandhi family has accepted political play-offs from the KGB which, according to Gurumurthy, amounts to “a clear case of treason, besides the bribe.”

Based on 4 July 1992 leaks, The Hindu, as quoted by Gurumurthy, reported that” the Russian Foreign Intelligence Service admits the possibility that the KGB could have been involved in arranging profitable Soviet contract for the company controlled by Rajiv Gandhi family.” Gurumurthy additionally notes: “As early as February 2008, the German authorities had collected information about illegal money kept by citizens of different countries in Lichenstein Bank. The German Finance Minister offered to provide the names of account holders to any government interested in the names of its citizens. There were media reports that some 250 Indian names were found in the Lichtenstein Bank list.

Meanwhile, will Swiss banks oblige? A new OECD Declaration paves the way for access to information on bank accounts in tax havens like Switzerland but, according to Frontline (June 2014), it is “still skewed in favour of tax havens.”

SIT has a tough job ahead, but at least it can get information as to how many of our politicians et al have in recent times made trips to Geneva and for how long a period. What is our Embassy in Geneva doing when Indians are noticed entering Swiss bank premises right in front of their noses? Or is it that the embassy staff couldn’t care less? Surely, Indians wouldn’t be going for howsoever long a stay in the Swiss capital, to enjoy masala dosa and dahi vada?