Election season is here and illicit money flow is set to increase. This is the time to get them, provided there is political will
Last month, a politician with formidable clout in one of our national parties arrogantly announced that he had spent far in excess of the Election Commission’s limit during his election campaign in 2009. What was more surprising than his act of flouting the EC’s well-laid-down rule was his gung-ho attitude in making this revelation in full media glare.
For a few days, it seemed that the MP was in for serious trouble. The Income Tax authorities and EC send him “notices”. But nothing happened. Soon he slipped out of the news cycle and life went on as before.
For Indians, used to the immunity of the rich and powerful from laws, this was another reminder of how close we are on the brink of failed statehood. What added a tinge of irony to the MP’s remark was the fact that his own party had made “return of black money” from Swiss banks an election issue. Information from international NGOs put the estimates of India’s contribution to global illicit fund flow in the region of $214 billion over a five-year-period beginning 2008. This means that even as “black money return” singed the popular consciousness on the hustings of 2009, more money was going underground than ever before.
When the world’s largest democracy goes to the polls, money flows like water. Undoubtedly most of these moneys flow through international channels raising hackles in world capitals because of the profound implications of these transfers on several national economies - apart from India’s.
In early 2011, several reports in the world Press reported that Swiss Bankers Association (SBA) officials to have said that the largest depositors of illegal foreign money in Switzerland are Indians. But the SBA retracted, saying that these “allegations” were “baseless.”
James Nason of Swiss Bankers Association said in an interview about alleged black money from India, “The (black money) figures were rapidly picked up in the Indian media and in Indian opposition circles, and circulated as gospel truth. However, this story was a complete fabrication. The Swiss Bankers Association never said or published such a report. Anyone claiming to have such figures (for India) should be forced to identify their source and explain the methodology used to produce them.”
After the Double Taxation Avoidance Agreement was revised in August 2010, it was expected that the government will make enquiries to find specific information about the possible black money being stashed in Switzerland.
However, even after receiving a list containing names of 782 Indians in 2011, the only thing the Finance Ministry divulged was that none of the incumbent parliamentarians were among the list. The government blatantly refused to divulge details citing privacy reasons.
After BJP’s insistence to make public the names of black money depositors, the government published in May last year a White Paper, which claimed that as per the estimates of the Swiss National Bank the total black money stashed by Indians there till the end of 2010 was ‘just’ Rs 9,295 crore ($2.1 billion).
Ironically, the White Paper claimed incredibly less, about 700 times lesser than alleged by the non-ruling parties, amount of black money deposited abroad by Indians.
Interestingly, the then CBI director had revealed during a Interpol programme in February 2012: “It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians.”
As per the media reports, the CBI chief had added, “If the king is immoral so would be his subjects.”
The revelation had then raised a din. Furore swept the media — where did the CBI chief get this fantastic figure from? As expected, probably under the government pressure, a few days later the CBI Director clarified in a statement before the Parliament’s consultative committee that the $500 billion of illegal money was an estimate based on a statement made to India’s Supreme Court in July 2011.
To further discount the claim and lessen the damage to the image of the Centre, the government claimed that after meticulously enquiries it was found the amount of black money deposited in the Swiss banks by Indians was just 0.13 per cent of the total bank deposits, including those from other countries, by the end of 2010. The deliberate attempt by the government drastically downplayed the black money amount, which stood at 0.29 per cent in 2006.
Indian tax evaders are notorious for the creativity they employ in avoiding being booked by the government. As per a report published in a prominent English daily, on May 19, 2010 one of India’s largest engineering and construction companies paid a small amount of about Rs 1.38 crore into the account of Kolkata firm ostensibly for a outsourcing job.
However, this jugglery was out after the enquiry by IT officials. The investigation into how money flowed through the Kolkata firm provided an insight into a business that has always existed in the shadows.
This is not a one-off case. It’s a business that serves the needs of India’s biggest and most well-known companies, and in many ways is essential to the way corporate India functions! What is required for we Indians is to come to terms with the duality of our economy — the ‘white’ and the ‘black’ economy — and their symbiotic relationship, especially when elections are near.
(The writer is News Editor, The Pioneer)