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--------------- Print Magazine --------------
 
  May 2016
 
  April 2016
 
 
 
 
Legal Article

PLUGGING THE BALCK HOLE

Joginder Singh, IPS (Retd.)
Former Director, CBI

India Against Corruption Movement activists have released a list of 600 Indians whose Rs.6000 crores  is lying in Swiss Banks. It is reported that the list is already with the Government of India. According to the Government the appropriate action against such defaulters has been taken. What action has been taken is still a mystery to the common man. It might appear amazing  that what the entire world including the man in the streets in India knows about black money,   our Government  says that it does not know  or pretends not to know.

Swiss Banking Association report, 2006 details top bank deposits in the territory of Switzerland by nationals of following countries :

India $1,456 billion
Russia $470 billion
U.K. $390 billion
Ukraine $100 billion
China $96 billion

The Government says that it has no idea about the extent of the money which has been secreted abroad. It might be right to a limited extent, as the legal banking channels are never used for sending and secreting  illegal and tax evaded money. The  Union  Finance Minister says that the legalities prevent the Government from disclosing the details of  black money held abroad by the Indians. The interim recommendations of BJP Task Force 2009 have estimated the amount of black money to be between $500 billion to $1,400 billion, according to the Finance Minister. But a  recent study by Global Financial Integrity has estimated the present value of illicit money outflow to be $462 billion.

Union Finance Minister says  "All these estimates are based on various unverifiable assumptions and approximations. Government has been seized of the matter and has constituted a multi-disciplinary committee, to get studies conducted to estimate the quantum of illicit fund generated by Indian citizens.Legalities come in the way of detecting and recovering black money."

India is a sovereign Republic and  its Parliament is supreme. Legalities coming in the way of getting black  money are framed into the laws by the Government. It is upto it to excise such laws which hinder the objective of  unearthing and getting black money back.    

In the first place, it should ask itself, as to why a legal framework be provided to the crooks and thieves to get away and what can be done to rectify the situation.

When the world has moved on to the 21 st century, we are still clinging to laws of 1863,  in which the onus lies on the prosecution to prove a case. Even when Raju of Satyam  admitted his guilt the legal system still requires  that the trial must go on and he be given all opportunities to defend.

Not only are our  laws antique, but there is also a weak criminal justice system and it suits the Government not to strengthen it as 31% MLAs and MPs have a criminal background or are facing trial.

The Supreme Court has often observed that the criminal justice system has collapsed. Besides  neither the Government nor the people look at financial crime as something serious or on par with murder or dacoity. There is no stigma attached to cheating or defrauding in the stock market or possessing or making money merrily.

The following major scams have occurred in India, apart from others, which  are a daily occurrence:

2G Spectrum Scam; Commonwealth Game Scam; Telgi Scandal; Satyam Scam; IPL Scam;  Hawala Scam;  Fodder Scam;  Bofors Scam; Ketan Parekh Scam; Stock Market scam by Harshad Mehta ( since dead)

It is no secret that no deal worth its name, no transaction whether of  the land or  other  property, is complete, without a substantial component of  the black money. Having been President of a  Co-operative Housing  Society in Delhi principally meant for the Members of the Parliament, Ministers and    Governors, including  a Former Prime Minister, I can tell that the selling price for a four bed room flat is over ` 3 crores, as any property dealer in Dwarka shall also confirm. But the sale deeds are registered not even at 25% of the value as per the Registered Deeds submitted to the Society office.

In my rough estimation, on the conservative side, at least ` 10,000 crores is generated daily as black money all over the country.

The Revenue Department has the power to acquire such undervalued property. But the procedure being so cumbersome and laborious, it has been used in rare cases. So not only this state of affairs leads to the generation of black money, but also deprives the Government of the revenue. Obviously, one factor is the lack of coordination between the Sale Deed or Power of Attorney  holders  registering authority along with the other wings of the Government.  Probably, there is more black money in our country than in all tax havens put together.  More than that, though all political parties urge that the black money be brought  back from tax havens, nobody has demanded that Government should take steps to end its further generation.

Nearly 80,000  to 90,000 people travel to Switzerland every year; 25,000 of them  quite frequently. Clearly they would not be travelling for bona fide   tourist purpose but for some other 'substantial' reasons. The Finance Minister admitted that the  Government has detected undisclosed income of about ` 15,000 crore in the last 18 months. During the same period, Directorate of International Taxation has collected taxes of ` 34,601 crore.           

Money stashed abroad is not always the tax evaded money. Drug lords, gun runners,  terrorist groups, gangsters all over the world, along with International Syndicates also keep their money in safe havens, where they can lay their hands on it, in times of need for their operational purposes. There is no mechanism with the Government to determine and say with surety, that the money hoarded  abroad is only tax evaded money and not the  other crime linked cash. The Revenue Department and other agencies of the Government like the RAW and State Trading Organisations  have their offices abroad. There is no common mandate to them to report any suspicious transactions  by the Indians  either visiting or staying abroad.

The stark truth is that the black money is the result of high level corruption prevailing in our country. The schemes meant for the poor,  even as per the Government reports, are  not implemented and the money is siphoned off.                  

Even the Apex Court says that nothing moves without bribery in India.

The Finance Minister has said that the department had the names of account holders in Liechtenstein's LGT Bank as well as information given by German banks. Incidentally, there are  only 15 banks in Liechtenstein, of which seven are Swiss. The principality with an area of about 160 sq km is surrounded by Switzerland and Austria and has a total population of 67,000 people. A good sleuth even on a  tourist visa can spot Indians  roaming about and visiting 15 Banks. The rest of the job of tracing the flight of black money from India can be done locally provided the Government has the will.  So far the Government has made excuses, some tenable and some untenable. Unfortunately, no Government, irrespective of the party in power, has made even a pretence of stopping the generation and flight of black money from India, forget about getting the black money back. Thanks to the prodding of the Supreme Court, the Government has started or at least shown motions of acting in retrieving the Indian money stashed abroad.

However it must be remembered that pretension almost always overdoes the original, and hence exposes itself.

 
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