Thursday, February 16, 2012

$500 million (24.5 lakh crore)of illegal money of Indians is deposited in tax havens abroad

SreeNair | 11:35 AM |


            Finally an official disclosure has come from the horse mouth on the quantum of black money stashed in tax havens by Indians.The revelation came from the CBI chief Mr.A.P.Singh,in the wake of the opening session of the six-day international meet of the first Interpol global programm on Anticorruption and Asset recovery.The meeting jointly hosted by the Interpole and CBI is attended by top slueths ,39 police officers, investigators and prosecutors from various Interpol countries including China, United Kingdom, Nepal, Afghanistan, Sri Lanka, Hongkong, Australia, Indonesia, Fiji, Malaysia, Singapore , Philippines and India.
Mr.Singh said that a whopping $500 million (24.5 lakh crore)of illegal money of Indians is deposited in tax havens abroad.

He said that 53% of countries said to be least corrupt by the Transparency International Index were in effect offshore tax havens.They include NewZeeland ,which is ranked as the least corrupt country,Singapore ranked anumber five, and switzerland number ranked seven.

"In some of the recent important cases being investigated by the CBI such as 2G, CWG and Madhu Koda, we find that money is taken to Dubai/Singapore/Mauritius from where it goes to Switzerland and other such tax havens," he pointed out.

The CBI Director also referred to the need for "ethics in governance". He said, "I am prompted to recall a famous verse from the ancient Indian scriptures which says 'yatha raja tatha praja'

Evidently embarrassed the Swiss embassy in a swift movement issued a press release "it wishes to make a clarification in view of unsubstantiated media reports that have been recently published about Switzerland and Swiss Banks."saying that "such estimates and statistics lack evidence and are uncorroborated".

The government hastly interposed that the CBI chief A P Singh's statement on black money stashed abroad was based on the report of the Supreme Court-appointed committee on black money.

"I have spoken to the CBI Director and he told me that he made the statement on the basis of a report prepared by a Supreme Court-appointed committee," Minister of State for Personnel V Narayanasamy told reporters in Delhi.

On Wednesday the 19th of January-2011 the Supreme Court of India called the shameful phenomenon of Indian funds kept illegally abroad as “theft” and “plunder” and not merely a tax evasion. It also demanded an “action taken” report on all “faceless” Indians who had parked their ill-gotten money overseas. "It is a pure and simple theft of the national money. We are talking about mind-boggling crime. We are not on the niceties of various treaties," remarked a bench comprising justices B Sudershan Reddy and S S Nijjar, while hearing a petition by former law minister Ram Jethmalani and others for retrieving Indian black money stashed in foreign banks.The apex court had expressed displeasure even last week over the government’s reluctance in disclosing the names of Indian having black money moved to foreign banks.

India today quotes Gian Trepp, a Swiss financial journalist and author: "Switzerland is the top destination for illegal funds because of its strict secrecy laws. Also, Swiss banks sell additional masks to hide the identity of their rich clients, like trusts in the Cayman islands, shell companies in Panama, or foundations in Liechtenstein, all run by nominees."

India was ranked 6th on the black money top ten countdown for illicit outflows monitored during 2002-2006. The estimated average amount stashed away annually from India during 2002-2006 is $27.3 billion US dollars.

The IMF estimates that the quantum of black money parked in tax havens by citizens of the world excluding Switzerland, China, Taiwan and Oil Exporting economies is a whopping $18 trillion. The financial meltdown experienced in the world can to a certain extend be identified to the black money. Mr Singh says that as per the World Bank , the cross border flow of black money is $1.5 trillion and $40 billion is the bribe paid to Government servants in developing Countries.

The Global financial Integrity – a Non-profit research organization – working in the area of Tax Havens has estimated for India that the present value of illegal financial flows held abroad is $500 Billions. This means that almost three-quarters of the illicit assets comprising India's underground economy—which has been estimated to account for 50 percent of India's GDP (approximately $640 billion at the end of 2008)—ends up outside of the country. There is an intimate link between monies stashed away abroad and bribes, corruption, kickbacks and criminal activities. Still the government of India seems to be keen to treat the issue as a tax evasion issue only.

In the last few years many countries in Europe as well as USA have taken several steps that included geo-political coercion, financial penalties and bribes, to secure information and get back their illegal funds from abroad. The USA forced and got names of more than US 4000 clients of UBS bank from Switzerland.France and Germany acted in similar lines. Germany even officially bribed the Lichtenstein Bank officials to get the secret names of their citizens who had hoarded black wealth in LGT bank of Lichtenstein. Recently citizens of Tunisia were able to freeze the ill-gotten wealth of its rulers in Swiss banks.

India and Switzerland are signatories to the United Nations Convention Against Corruption. Yet India has not ratified the UN Convention till today. According to global anti-graft watchdog Transparency International, India should endorse the United Nations Convention Against Corruption for the recovery of India’s wealth, which has been hoarded in foreign banks. The UN Convention helps the country, which seeks to recover the assets stashed away. This is the greatest achievement of the Convention. The reluctance shows that the Government of India is not keen on securing global co-operation to tackle corruption in India.

The Double Taxation Avoidance Treaty with Switzerland is not an effective mechanism to tackle the problem of money laundering. The Swiss government for instance cannot ask the Swiss banks to disclose any name under the Swiss law.

"Yetho Raja Thatho praja " would mean the real culprit is the elite who rule the country.It requires no other proof than the CBI revelations to substantiate it.

The central Government has been unwilling to disclose the names of of Indian citizens involved in the black money.Finance minister evaded the question from the opposition with stoke reply that the amount involved is unknown.The apex court had expressed displeasure over the government’s reluctance in disclosing the names of Indian having black money stashed in foreign banks. “What is the difficulty in disclosing the information,” the bench had asked on 14 January, when solicitor general Gopal Subramanium told the SC bench that the government has got the details but did not want to reveal it.

One internet report says" WikiLeaks has posted in the website that – Indian have more money in Swiss Banks than any other nationality. We have proof regarding their names, amount and name of bank which we got from Rudolf Elmer. We have 2000 names in two discs, the major share is from India. The source of income is from project hedge, illegal share in stock market, drug deal, fake project. 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. Otherwise WikiLeaks will do the job."

The first list contained many prominent Indian political leaders.

The government was finding it "difficult" to get black money stashed in overseas tax havens because the countries lacked the political will to curb the menace, Minister of State for Personnel V. Narayanasamy said Monday in the meet.Mr Singh wishes that "We need to relentlessly pursue asset recovery strategies to make such illegal acquisitions a no-profit high-risk proposition."

The money which is getting parked in Swiss Banks are the rightfull money of the poor,the money to be invested for the domestic developments.

Industry chamber Assocham in its recent report on 'Black money menace in India' had suggested that the government should provide immunity to persons wanting to bring back funds stashed abroad.The Finance Ministry, according to sources, is not considering any amnesty plans as such a scheme raises ethical questions and benefits law breakers. Corporate Affairs Minister M Veerappa Moily had recently said that amnesty scheme was not the right way to deal with the menace of black money.

"Amnesty scheme is not the only answer," he had said and stressed that in practical terms, one has to remove the root cause of black money to eliminate generation of such funds.

After a a series of demonstrations and protests across India, the government finally appointed a high-level committee in June 2011 to study the generation and curbing of black money. The committee finalized its draft report on Jan 30, 2012. The report stated: "the two major national parties ( Congress and BJP) claim to have incomes of merely Rs 500 crore and Rs 200 crore. But this will amount to a fraction of their actual expenditure. These parties spend between Rs 10,000 crore and Rs 15,000 crore annually on election expenses alone.This is black money."How could they act against corruption and blackmoney.

Then how to unearth the black money stashed in tax havens.One netizen writes in Yahoo answers;"purchase white paint and paint black money with white color!".

The CBI chief must have exactly this in his mind when he spelt: "Yetha Raja thatha praja".

"If you want to know what God thinks about money, just look at the people He gives it to." - Dorothy Parker


1 comment:

  1. 500 million usd= 2750 crores indian rupees only


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