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BLACK MONEY INDEX I. WHAT IS BLACK MONEY? II. CREATION AND
ACCUMULATION OF BLACK MONEY III. HOW THE BLACK MONEY IS STASHED
AWAY IN FOREIGN BANKS, ESPECIALLY IN SWISS
BANKS? IV. HOW MUCH BLACK MONEY IS STASHED AWAY IN FOREIGN BANKS
ESPECIALLY IN SWISS
BANKS? V. REPLACEMENT OF FERA (FOREIGN EXCHANGE REGULATION ACT
1973) BY FEMA (FOREIGN EXCHANGE MANAGEMENT ACT 1998). VI. BLACK
MONEY IN INDIA - SOME EFFORTS TO UNEARTH IT. VII. PUBLIC INTEREST
LITIGATION (PIL) ON BLACK MONEY. VIII. BLACK MONEY IN FOREIGN
BANKS-LEGAL POSITION. IX. HOW THE USA COULD GET THE INFORMATION
FROM THE SWISS BANKS? X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT)
AGAINST THE TAX HAVENS. XI BETTER ATMOSPHERE PREVAILING AT PRESENT
TO UNEARTH BLACK MONEY. XII. CONCLUSION XIII. SCAMS IN INDIA FROM
1992 TO 2009
BLACK MONEY IN INDIA
Black Money issue is not confined to India alone. It has become
a worldwide topic in view of the world financial crisis being faced
by the world. In India it has become a hot topic as it was raised
as an election issue by Bharatiya Janata Party leader L K Advani in
the last general elections, 2009 who promised to bring back black
money stashed away in foreign banks, if his Party is elected to
power. (it is a different matter that he had no such idea when he
was Deputy Prime Minister in NDA Govt. during 1998-2004). It is
good that a debate is going on in India about the Black Money.
Black Money is known by many names, such as illegal money, black
economy, tainted money, dirty money, dirty economy, parallel
economy, shadow economy, under ground economy, secret wealth,
underdog etc I. WHAT IS BLACK MONEY? a) The National Institute of
Public Finance defined Black Money as illegal income accrued on
account of not showing it to the authorities concerned in order to
avoid various taxes, thus violating various Tax Laws. Some times it
is called No.2 economy. Thus the Black Money comprises Tax- evaded
income and illegal or crime money. Such income may be related to
both direct taxes which means Income Tax, Corporate Tax, Capital
Gains etc. or indirect Taxes such as Tax on commodities, services
etc. This is intended to disappear from any record.
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b) Black Money can be divided into two kinds. 1. Black Money in
the country of origin i.e. Black Money operating in India. 2. Black
Money in Foreign Banks like Swiss Banks. II . CREATION AND
ACCUMULATION OF BLACK MONEY a) There are many ways to create and
accumulate Black Money. One can see it in everyday life. There will
be much scope for Black Money in foreign trade. Exporters will
export more but can show less in Invoices and in imports also
imports may be more and Invoices can be shown for less and they can
manage the Customs Authorities and both the exporters and importers
can keep the amounts illegally saved in foreign banks. The
industrialists, the manufacturers etc. can show less than the
products actually produced and they will create Black Money by
selling the products which were not shown in the accounts and by
managing the departmental officials concerned. Black Money will be
created in works-contracts of both State and Central Govts. and
similarly in Govt. purchases. Corruption is rampant in Govt.
Offices especially in property registration transactions. And
corruption means Black Money. In film industry, in Educational
Institutions and in real estate business, Black Money will be
created. Allegations of corruption are there in purchases of
defence equipments, irrespective of the Party in power. In
elections irrespective of general or local, selling of seats by
political parties and organising defections in political parties
have become hot beds of corruption and transfer of Black Money.
There are instances of sale and purchase of posts of Ministers.
Crime and Terrorist activities can be mentioned as seats of
corruption and Black Money creators. Thus any number of instances
can be quoted which will help creation and accumulation of Black
Money. In one sense Black Money can be ssid to be peoples money
stolen from them. Thus Black Money or black market emerges through
manipulation of the economic forces of supply and demand for both
currency and commodities. It will also emerge when Trade and
Industry create an artificial situation of scarcity or glut and
amass wealth. Real estate and construction works in some foreign
countries such as Gulf Countries also have become the creators of
Black Money. As economic activity grows so also the Black Money.
The enormous developments in Science and Technology and
liberalisation policies of the Govt. helped economic activity and
creation of Black Money. Smuggling, drug trafficking also help the
creation of Black Money. The main sources of Black Money can be big
business, the politicians, the bureaucrats and their supporters.
Sometimes even white money is converted in to Black Money.
b) Black Money can be of two kinds. Black Money inside the
Country and Black Money in overseas. Let us first deal with the
position inside our Country. The role and the impact of the Black
Money inside the Country cannot be underestimated. Some may say
that Black Money has a positive role in the sense that it helps
economic growth by stimulating consumption by helping in increasing
the purchasing capacity of some people. But the negative impact of
Black Money is very much. Black Money has become a parallel
economy.
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Now a days, it is increasingly realised worldwide that one of
the main reasons for the present day world financial crisis is the
role of the Black Money worldwide. The same holds good for India
also. One estimate is that Black Money available in India, is
almost equal to that of white money. So, Black Money is in a
position to compete with the white money. So, the Black Money can
undermine the economic projections. It can distort and upset the
Governments not only economic but also political policies. The
govt.s inability to control enormous price rise, resulting in the
Central Government blaming the State Governments and vice versa,
can be cited as an example, though the Govts. may not agree. Black
Money can play a king maker role. Thus Black Money can be a threat
to Indian democracy. It can play a role to create confidence in the
Govts., or the other way also.
c) The Black Money kept overseas can be said to be a
Non-Performing Asset (NPA) so far as India is concerned. The money
kept secretly in the foreign banks will be useful to that country
where it was kept and the secret deposits will get only small
interests on the amounts. III. HOW THE BLACK MONEY IS STASHED AWAY
IN BANKS, ESPECIALLY IN SWISS BANKS? a) Switzerland is known for
Swiss banks where foreigners including indians used to keep their
secret illegal black moneys in those banks. Thus Switzerland is
known as a TAX HAVEN. A TAX HAVEN IS A COUNTRY WHERE TAXES ARE
LEVIED AT A LOW RATE OR SOME TIMES NOT AT ALL. Thus, a Tax haven
will not substantially implement International Tax Standards. At
present there are about 37 countries that are called Tax Havens or
Secret money destinations. Besides Switzerland some of them are
Andorra, Anguilla, Antigua and Barbuda, Aruba, Austria, Belize,
Bahamas, Bermuda, British Virgin Islands, Cayman Island, Costa
Rica, Cook Islands, Cyprus, Dominica, Gibraltar, Greneda, Honkong
Liechtenstein, Mauritius, Marshal Island, Monaco, Montserrat,
Malaysia, Philippines, Nauru, Antilles, Singapore, Uruguay.
What is Tax Haven: Tax Havens impose nill or only nominal taxes.
They are used by non-residents to escape high taxes in their
country of residence. Tax Havens have laws which protect businesses
from the scrutiny of Foreign Tax Officials
and authorities. A Lack of transparency in the operation of the
legislative, legal or administrative
provisions is another factor used to identify Tax Havens. b).
Now we shall deal with Swiss banks. There are 410 banks and
security dealers in Switzerland. The main banks are UBSag and
credit Suisse.(by the merger of union bank of Switzerland, which
was established in 1862 and Swiss Bank Corporation, which was
opened in 1872, UBSag was established in 1998). These two banks are
having half of the total deposits. These two banks have world wide
network. They have branches in many cities such as London, Tokyo,
Hong Kong, New York, Washington etc., and in many international
centers. Besides these two, there is one Swiss National Bank and
many private banks in Switzerland. One (Non-
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Citizen) need not be Millionaire to open accounts in these
banks. With a mere 5000 Swiss Francs, one can open an account. One
need not have minimum balance to continue the bank account. They
ask for no Income Tax from non-citizens and they ask no questions
about their money. The bank account can be closed at any time. The
bank account will not be in the name of the individual but with
numbers only. The account holder can meet the banker and can know
where his money was invested. As the accounts will be in numbers
only, the names will be known only to the bank manager or one or
two individuals. Thus, secrecy will be maintained.
c) Switzerland could maintain its neutrality in the first and
the second World Wars. It joined the UNO only in 2002. It is also
known for its political and economic stability. In 1934 itself
Swiss Parliament passed a Banking Law, giving secrecy of bank
accounts top priority. Tax evasion though illegal, is not
considered a criminality. But Switzerland considers Tax evasion to
be a minor matter and can prosecute employees of any Bank giving
information about individuals indulging in Tax evasion. Switzerland
made secrecy a fundamental right. The value of Swiss currency Franc
used to be stable. The GDP (Gross Domestic Product) of Switzerland
used to be much higher when compared to most of the other foreign
countries. All these factors helped Switzerland to be a Tax Haven.
The Swiss Financial Market Supervisory Authority, a legally
constituted body used to coordinate and control more than 400 Banks
in that country. In 1993, an institution known as Banking Ombudsman
was created by the Swiss bankers association to help the customers
and to attend to their grievances and to settle the disputes
between the customers and the banks or between the banks. Bank of
International Settlements to whom all Central Banks in the world
are affiliated is seated in Basel city in Switzerland, which is a
small country with an area of 41293 sq km and population of 7.2
million (area of Guntur dist 11400 sq km and population of 2.4
million. Four times the Guntur Dist). GDP $260.7 billion (Indias
GDP $510.2 billion) GDP per head is$ 37150 (Indias is $ 490). d)
Not only in Switzerland but in most of the Tax Havens, it will be
very difficult to trace out the origin of the money because of the
methods they adopt. Money from criminal activities may be routed to
these bank accounts via Shell companies or dummy companies - money
l aundering. Money may be transferred from one account to the other
and the previous account is closed so that it becomes very
difficult to trace out where the money is originated from. Bankers
themselves will facilitate such activity by legal firms and
chartered accountants operating in Tax Havens. Money is sent from
one Shell company in one Tax Haven to another in a different Tax
Haven. Major Banks will facilitate such activities by maintaining
hundreds of companies in Tax Havens. IV. HOW MUCH BLACK MONEY IS
STASHED AWAY IN FOREIGN BANKS, ESPECIALLY SWISS BANKS? a) The
Organisation for Economic Cooperation and Development (OECD), an
organisation of developed countries has estimated that about $11
Trillion(one trillion means one million million, means 1 followed
by 12 zeros) more than 10 times the amount committed by G-20
Countries to revive the world economic crisis, was stashed in Tax
Havens
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b) A report by Global Financial Integrity (GFI), a think tank
located in Washington DC that promotes national and multilateral
policies, safeguards and agreements aimed at curtailing illicit
financial flows and enhancing global development and security, says
that the top five countries having money in Swiss Banks are : India
- $1456 Billion Ukraine - $ 109Billion Russia - $ 470 Billion and
China - $ 96Billion UK - $ 390 Billion In 2006, the Swiss Banks
association released a white paper which tallies with the above
estimates. The report also said that during 2002 to 2006 the total
illicit financial out flows from india averaged from a low of $
22.7 Billions to a high of $ 27.3 billion per year. The report
further says 1 Trillion to 1.6 Trillion of illicit money moves
yearly across the borders and half of it comes out of developing
and transitional economies. Asia was the dominant in overall
illicit financial flows from developing countries. Europe ranks
second with 17%, while the Middle East and North America (MENA)
with 15%. Similarly the Western Hemispheric countries account for
another 15% while African Nations share will be about 3%. Global
Financial Integrity (GFI) Research Report: In Dec 2008, Global
Financial Integrity (GFI) published a Research Report titled
Illicit Financial Flows from developing countries : 2002-2006 which
estimated total illicit capital flight from developing countries to
be as high as $ one trillion per year. The report is based on
analysis and employs two main models of estimating illicit
financial outflows from developing countries based on the World
Bank Residual (based on Change in External Debts or CED) and The
Trade mis-pricing (based on the Gross Excluding Reversals or GER)
methods. During the period 2002 to 2006, total illicit financial
outflows from India averaged from a low of $ 22.7 Billion to a high
of $ 27.3 Billion per year. The report is based on Examination of
Trade and External Debt Data from 2002-06 maintained by the
International Monetary Fund and the World Bank. The report does not
link illicit financial flows with the underlying activities
(whether legal or illegal) that generated the capital to be
transferred abroad. This $ one trillion or more a year and the
structure that facilitated its movements is not the only biggest
loophole in the GlobalFree market system. It is also the most
damaging economic condition, affecting developing and transitional
economies. It drains hard currency reserves, heightens inflation,
reduces tax collection, worsens income gaps, cancels investments,
hurts competition and undermines trade. It leads to shortened lives
for millions of people and deprived existences for billions more.
Within the economic realm as distinguishable from political affairs
or environmental constraints, nothing else approaches the harmful
effects of massive outflows of illicit money from poor countries to
rich countries. Of the $ one trillion to $1.6 trillion of illicit
money estimated to be moving yearly across borders, half of it - $
500 to $ 800 billion a year comes out of developing and
transitional economies. These are countries that often have weak
legal and administrative structures.
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c) Global watchers of the Indian economy estimate that Indias
wealth safely kept in Tax Havens will be around $1.5 Trillions.
This estimate is supported by Tax Justice Network, an organisation
working towards fair tax treatment to all. The Indian Institute of
Finances based in Bangalore, in a study indicated that 56% of the
Black Money stashed in Swiss Banks belongs to Indians. The Black
Money stashed between 1946-2008 will be Rs. 70 lac crores. Various
political parties and other groups have been claiming that the
Black Money stashed away in Swiss Banks by Indians exceeds
$1Trillion. These are only estimates. But the correct figures can
be given by Swiss authorities only. But there seems to be an
agreement that Rs. 70 lac crores are in Swiss Banks which belong to
Indians. But it is a matter of record that approximately 80000
Indians travel to Switzerland every year and nearly 25000 of them
go there frequently. India is said to be the 83rd most corrupt
country in the world. Bribes have become a part of daily life. The
bureaucracy which is said to be the steel frame of governance has
become the steal frame. The fact that worries everybody is
corruption has engulfed the respected Fourth Estate. We are hearing
about "Paid News", "Yellow Journalism" etc. It is disturbing to
note that media (both electronic and print) in Andhra Pradesh made
Rs. 350 crores by publishing Paid News during General Elections in
2009, with Telegu Language News Papers ruling roost.
d) How the Black Money can be utilized: The Black Money
estimated to be stashed away in foreign banks will be Rs. 70 lac
crores($1400 Billion ). It is 14 times bigger than Indian annual
budget. With a part of it, Indias external debt of $ 220 Billion
could be cleared. India can become an economic super power. If so $
1 will be available per Rs 10 or Rs. 15 instead of present Rs. 50
or so. Indias internal infrastructure could be developed and
poverty in India could be removed. Thus India could do wonders if
all the secret monies are brought back. Every poor man in India
could get 1lac rupees, if it is distributed e) Black money holders
in the world A popular magazine of Switzerland, SCHWETZER
ILLUSTRIRTE (in Germany) dated 11.11.1991, under the heading curse
of money-the Swiss Bank accounts of the dictators disclosed the
names of the following politicians of the developing world with
stashed Black Money in the Swiss banks with the amounts they
deposited. Name of the Politician & country Amount stashed in
Swiss Banks in Francs 1. Idi Amin, Ruler of Uganda 1 million 2.
Anastaslo Somoza, Ruler of Nicaragua 750 million 3. Jean Claude
Duvallar President of Haiti. 15 million 4. Manual Noriega,
President of Panama 6 million 5. Suke Mobutu, Ruler of Zaire 600
million 6. Nicholas Sesusacu,Ruler of Romania 600 million 7. Halley
Solassee, Ruler of Ethiopia 225 million 8. Abu Nidal, Ruler of
Palbastinanse 1 million 9. Jaafar Numeiri, Ruler of Sudan 34
million 10. Suharto, Ruler of Indonesia 25.5 million
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11. Saddam Hessian, Ruler of Iraq 700-800 million 12. Jean B
Bole, Ruler of Zontralafrica 2.8 million 13. Rajiv Gandhi, Ruler of
India 2.8 million 14. Riz Pahlavi, Ruler of Iran 6.7 million f)
Another report published in Deccan Chronicle dtd 26 Feb 2010,
mentioned the following 34 names who are alleged to have hided
their wealth in Switzerland and other Tax Havens such as Monaco,
Liechtenstein, Austria etc. The history of laundered money parked
in secret Bank Accounts dates back to 79 years, when American
gangster, Alphonse Gabriel "Al Capone" was found stashing his
illicit money in secret Bank Accounts. The list includes the
following names and countries. 1. Asif Ali Jardari, present
President of Pakistan, 2.Joseph Estrada, former President,
Phillippines, 3.Ferdinand Marcos, former President Phillippines,
4.Genl Abacha of Nigeria, 5. Genl. Noriega, former President of
Panama, 6. Yasir Arafat, Late Palestian Leader, 7. Carlos Salinas
de Gortari, former President of Mexico, 8. Helmutt Kohl, former
German Chancellor, 9. Benazir Bhutto, former Pakistan PM, 10.
Jacques Chirac, former President of France, 11. Fujimori, former
President of Peru, 12. Augusto Pinochet, former dictator of Chile,
13. Charless Taylor, former President of Liberia, 14. Seymour
Arthur, former PM of Barbados, 15. Pavel Lazarenko, former PM of
Ukraine, 16. Alfonso Portillo, Ex President of Guatemala, 17. Chen
Shui Bian, former President of Taiwan, 18. Basdeo Panday, former PM
of Trinidad Tobago, 19. Jean Claude Duvalier, former President of
Haiti, 20. Moussa Traorem, former Dictator of Mali, 21. Saddam
Hussain of Iraq, 22. Col. Gaddafi, President of Libia, 23. Sese
Seke Mobutu former President of Congo, 24. Lansana Conte, former
President of Guinea, 25. Gnassingbe Eyadema, former President of
Togo, 26. Daniel Arap Moi, former President of Kenya, 27. Omar
Bongo, former President of Gabon, 28. Obiang Nguema, Ex President
of Equatorial Guinea, 29. Blaise Compore, President of Burkinafaso,
30. Denis Sassou Nguesso, President of Congo, 31. Aduardo dos
Santos, President of Angola, 32. Hosni Mubarak, President of Egypt,
33. Yoweri Museveni, President of Uganda, 34. Ibrahim Babangida,
former dictator of Nigeria. While a few of these above mentioned
world leaders have already been convicted, others are either under
trial or have somehow managed to get away with these allegations.
V. REPLACEMENT OF FERA (FOREIGN EXCHANGE REGULATION ACT 1973) BY
FEMA (FOREIGN EXCHANGE MANAGEMENT ACT 1998). The NDA government
leaders like L K Advani, who now raises the issue of Black Money ,
while he was in power, helped the Black Money to be stashed away by
replacing FERA by FEMA. This was headed by the NDA government by A
B Vajpayee when Yashwanth Sinha was the Finance Minister. This
measure was opposed by the then Congress Party. But Sri Arun
Shourie of NDA recalled in an article published in India Express of
23.4.2009 that The Bills Act 1998 (both the Bills were introduced
in the Lok Sabha by the NDA Finance Minister Yashwant Sinha on the
same day) were broadly on the lines of a draft prepared under the
leadership of
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the Finance Minister P. Chidambaram. It goes to show that the
views of both BJP and the Congress about the Black Money are the
same. So one has to see what is the connection between Black Money
and FEMA and PMLA. In the same article Arun Shourie while
justifying the replacement of FERA by FEMA assigned the
following:
1. The demand for doing away with the harsh provisions in FERA,
came to a crescendo during the government of the V P Singh when
FERA came to be used for interrogating captains of industry like
Sri Kirloskar under harsh circumstances (in connection with a case
involving Black Money) 2. Like many well - Intentioned Laws FERA
paved the way for disaster. FERA created a flourishing Black Market
in foreign exchange. 3. It brought into the economic lexicon, the
word "Hawala" - illegal foreign exchange transaction became the
fuel for the growth of crime syndicates with trans-border
connections. 4. FERA also became a tool of oppression. Successor
Governments persisted the FERA and added COFEPOSA (Conservation of
Foreign Exchange and Prevention of Smuggling Act). 5. International
markets do not respect draconian laws. Mercilessly FERA was buried
finally on 11-5-2000. At this juncture it will be useful to know
the difference between FERA and FEMA (Foreign Exchange Management
Act 1998) and also about the PMLA (Prevention of Money Laundering
Act 1998) and the background in which they were brought up. These
two bills were unofficially circulated in 1997 itself among the big
business and industrialists. It was discussed thoroughly by them
and their views were taken in to consideration and necessary
changes were made and 1998 FEMA bill was finalized and was
introduced in the Parliament. The big business bitterly opposed the
PMLA and after certain changes to the original bill, this was also
introduced in the Parliament. The left parties criticized that the
Government succumbed to the pressure of the big business and the
bills were prepared to the satisfaction of the big business. It is
pertinent to know the differences between the FERA and FEMA.
Foreign Exchange is important for any country for foreign trade,
imports and exports and other foreign payments. Foreign exchange
reserves were very limited in 1970s. The necessity to have control
over it was felt necessary and FERA was passed. It will be useful
to recall three aspects of sanctions or controls imposed by FERA.
i) All foreign exchange dealings like payments for imports and
receipts for exports shall be done only through the Central
Government appointed dealer viz. the Reserve Bank of India. ii)
Nobody should keep even a small amount of foreign exchange with him
or her privately and every thing should be deposited with the RBI.
iii) All the dealings with India in foreign countries including the
transactions in Rupees are subjected to controls. Only RBI has got
the powers to relax the above controls. Every violation of FERA is
liable to punishment. Some violations attract even jail
sentences.Thus Hawala scams are also punishable with
imprisonment.
But between 1973-1998, one can find a lot of changes in Central
Governments economic, financial, trade and foreign exchange
especially LPG (Liberalization, Privatization and Globalization)
policies. Lot of opportunities came for FDIs in India and Indian
investments in foreign countries. One will find lot of improvement
in foreign exchange reserves. The aim of
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FEMA was to bring out the necessary changes in the foreign
exchange regulations in order to facilitate the country's economic
developments and enhance foreign reserves and its market. FEMA
provides for two categories of foreign exchange dealings which were
not there in FERA. i) Current Account transactions and ii) Capital
Account transactions. For the first category Viz. Current Account
transactions one need not take prior permission from the RBI,
before payments. Payments of Foreign Exchange Foreign trade,
current business, services, payment of interests for short term
loans, expenses of parents, spouses, children living in foreign
countries fall under this category. One can utilize the foreign
exchange freely. Under FERA one can not spend even a dollar without
prior permission of RBI. Similarly all the dealings of Indians
residing in India relating to sale, purchase, exchange of
properties, monies in foreign countries and the dealings of Indians
living in foreign countries relating to their properties, monies in
India and dealings between Indians in India and Indians living in
foreign countries also come under this category. No jail sentences
for any sort of FEMA violations. One can appreciate that lot of
difference is there between FERA and FEMA. It is also necessary to
acquaint about the PMLA (Prevention of Money Laundering Act 1998),
which was introduced in Parliament along with FEMA. PMLA has
nothing to do with foreign exchange. Some supporters of the big
business used to say that the penal provisions which were not there
in FEMA are introduced in PMLA, which is not correct on the face of
it. Actually PMLA relates to Black Money. It was estimated that by
31-03-1998, the Black Money in India was equivalent to 1/4th of the
GDP (Gross Domestic Product) which may come to roughly Rs. 3,11,887
crores. PMLA was brought about with a view to unearth and seize
Black Money. India was a participant in the summit of 185 countries
held in New York during 8-10 June, 1998 on Drugs under the
auspicious of UNO as Narcotic Drugs. Money laundering was defined
in Sec. 3 of the PMLA. The money or property illegally earned and
illegally kept in India or outside, all dealings of change,
exchange, transfer, alienation etc and all sorts of dealings,
direct or indirect relating to such monies or properties come under
money laundering. Thus it has nothing to do with foreign exchange.
VI. BLACK MONEY IN INDIA - SOME EFFORTS TO UNEARTH IT. Black Money
in India, (not money stashed away in foreign banks) including in
Indian banks in the benami names is estimated to be Rs. 25 lac
crores. Some attempts (some describe them as an eye wash) were made
to unearth it . a) The Janata Government headed by Morarji Desai in
1977withdrew Rs.1000 and above denomination currency notes from
circulation. But the NDA government headed by A B Vajpayee,
observing that the action was not helpful to achieve its objective,
repealed the earlier orders and again brought the above currency in
to circulation. b) Various incentive schemes were announced to
achieve the object of unearthing Black Money in India. In 1992, a
scheme to attract the Black Money holders was announced. If the
Black Money is deposited in National Housing Bank, the depositor
can withdraw 60% of the Black Money which automatically will be a
white money. Only 40% will go to the Government. But there was a
little response. In 1997, the then Central Government
(P.Chidambaram as
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Finance Minister) introduced a Tax Amnesty Scheme which was
known as Voluntary Disclosure of Income Scheme (VDIS). Under this
scheme, the Government will not ask about the details of the source
of income or whether taxes were paid or not and the Black Money
holders, if it is an individual, he or she can pay 30% as tax and
the rest can be kept as their own as white money. The same
principle applies even for the companies but it has to pay 35%
instead of 30%. No civil or criminal action will be taken against
the Black Money holders. But the scheme fetched only Rs10000
crores. VII. PUBLIC INTEREST LITIGATION (PIL) ON BLACK MONEY Former
Union Law Minister in NDA Government and a leading advocate Ram
Jeth Malani and five others including former DGP of Punjab K P S
Gill, former Secretary General of Lok Sabha Subhash Kashyap, poet
Sharmanand and his wife filed a PIL(Public Interest Litigation) in
Supreme Court for a direction to the Government of India to bring
back Rs. 70,00,000 crores illegally hoarded in Swiss and other
foreign banks, particularly the UBS Bank and freezing of accounts
of Indian business men, politicians and other influential persons
holding their assets there. In their petition, they have alleged
that the UPA Government was protecting those, who have committed
dacoity and have stashed away huge amounts of public money in Swiss
Banks defrauding the National Exchequer of a huge amount of tax.
The affidavit filed by the Director of the Department of Revenue,
Priya V K Singh, on 2-5-09 opposing the PIL said that it was
politically motivated (it is filed when the General Elections were
going on) that there are no authentic figures for the amount of
monies lying in those Bank Accounts, that the Central Govt. was
constantly alive to the need to be able to retrieve information and
that initiatives have been taken by Prime Minister Man Mohan Singh
during the G-20 Summit in London. This is not a case for judicial
review as the petition pertained to policy, regulation, economic
affairs, international cooperation and political leadership. The
affidavit further said that under a Double Taxation Avoidance
Agreement (DTAA) India had with the Swiss confederation,
information could be exchanged but Swiss Government is not under
any obligation to carry out administrative measures at variance
with their regulations or supply particulars not procurable under
their legislation, though in the past the competent Swiss authority
consistently refused to share bank particulars on the ground that
information on deposits of Indian residents was not necessary for
the application of DTAA but was required only for the enforcement
of Indian internal Tax laws and that such information was not at
its disposal under Swiss laws in the normal course of Tax
administration. The affidavit further said that the Government of
India has already approached the Swiss Government seeking
renegotiations of articles for an exchange of information under the
DTAA.
b) In their reply and rejoinder, the petitioners denied any
political motive and the case was adjourned and is in pending.
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VIII. BLACK MONEY IN FOREIGN BANKS-LEGAL POSITION a) The issue
of money in Tax Haven was raised for the first time in 2009
elections. L K Advani leader of the opposition in Lok Sabha and
leading figure in the Bharatiya Janata Party publicly stated that
if he is elected to the Government he will get back the Black Money
stashed in Swiss Banks. Not only that, the Election Manifesto of
BJP also said that unaccounted money kept by Indians in Tax Havens
abroad will be up to $ 1.5 trillion and they will take determined
steps to bring back the money. Similarly the CPI (M) and CPI
Election manifestoes were also in line on this issue. It is to be
noted that the election manifesto of the ruling Congress Party does
not make any mention of the issue of money in Tax Havens. It is
good that this issue was raised by the BJP even though the issue of
Black Money in Swiss Banks was in the public mind after the Bofors
case, SDW sub marine case, Jain Hawala case, Oil for food scam
etc., and even though the BJP was in power and L K Advani was the
Deputy Prime Minister during NDA Government from 1998 2003. It is
also to be noted that by the time the BJP raised the issue it was
the hot topic through out the world and the Governments in USA,
Germany, U K and France which were experiencing bad taste of world
financial crisis, individually and jointly have taken certain steps
to unearth the Black Money in Tax Havens. b) Before taking up
various initiatives it will be useful to discuss the legal position
obtaining in Switzerland to tackle the Swiss Banks and also the
method used by the USA to seek the secret information about the
names of the depositors from the USA in the Swiss Banks c) Before
approaching the Swiss Government for information regarding the
Black Money account or accounts of any individual, that country for
example India should investigate in to the illegal acts (violation
of Tax Laws etc.) committed by that individual. The investigation
should conclude that individual has committed or organized such
illegal acts from his own country. IX. HOW THE USA COULD GET THE
INFORMATION FROM THE SWISS BANKS? Switzerland told the Indian
authorities that it could not give information about the names and
the accounts of Indians holding secret Bank Accounts in its Banks.
In the beginning, they told USA also the same thing. But the
largest, Swiss Bank UBS has given in February 2009 the names of 250
persons holding the secret accounts and later agreed to give about
4500 names of US citizens holding the secret accounts. Why the
Swiss authorities agreed? This will be very interesting. Though the
US is the most powerful country in the world, the Swiss authorities
refused to cooperate in the beginning. The US, which was facing
financial crisis, began to take desperate steps to unearth the
secret accounts in the Swiss Banks. The IRS (Inland Revenue
Services, the US Tax Department) established a programme known as
Qualified Intermediatory (QI) Programme. It requested the foreign
Banks working in the US to get various forms to be filled up by
their clients (US citizens) to show their incomes and they have to
file them with the IRS. To overcome this difficulty, the Swiss
Banks found ways of hiding the identity of the true
-
owners of accounts with them through shell companies in other
Tax Havens. There are some private bankers like Broadly Birkenfield
in the US acting on behalf of Swiss Banks. He used to serve the
clients of the Swiss Banks in the US. The activities of the private
banks were illegal as he was encouraging the clients to violate US
Tax Laws. The IRS prosecuted private banker Broadly Birkenfield in
a court who accepted that he was serving clients of the Swiss Bank
including the UBS in the US. The court also found that the private
banker accepted helping a real estate developer evade $ 7.2 million
in Tax and hiding assets worth $200 million. It came to light that
Birkenfield was one of the many private bankers used by the Swiss
and others to get business from wealthy US clients. As the UBS name
gripped up, the US Government took the next step of charging a top
UBS executive who helped 20000 US individuals hide $ 20 Billion
from the US Government. As the case progressed, the entire UBS Bank
was threatened with indictment. Then the UBS came to terms with the
US authorities in February 2009. It agreed not only to reveal the
names of 200 to 300 US citizens holding secret accounts but also to
pay $ 780 Millions as compensation. The US next filed a case to get
about 52000 names of US citizens who are believed to have accounts
in UBS. The UBS tried every trick again not to reveal the names.
The Swiss Government even threatened that the coercive steps will
disrupt the diplomatic relations and threatened that it will
destabilize the world financial system and said that revealing of
names would violate the Swiss Criminal Law. The US Government
announced a Voluntary Discloser Scheme which allowed people with
illegal accounts abroad to come clean by paying the taxes and
accepting light penalty. But the judge went to the extent of asking
the US Government whether it was willing to seize the assets of
UBS. Ultimately the UBS again came to terms with the US Government
and agreed to give the name of around 4500. In the US, the IRS was
proceeding with the prosecution of some other private bankers and
more and more data was coming out. In Florida, some private bankers
Schumchai and Rickenbach were indicted in August 2009. The Black
Money in the US may be larger in absolute terms when compared to
Indias Black Money. As a per capita of GDP in US, it is only 5% but
in India it will be about 50%. So more problems for India if proper
steps are not taken to unearth the Black Money stashed abroad and
bring back it.
X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT) AGAINST THE TAX
HAVENS a) Union Finance Minister Pranab Mukharjee on 14-07-09
informed Rajya Sabha that till now the Central Government never
undertook the task of studying how much Black Money was there
inside and outside India in foreign banks, though some private
individuals and organizations have given some estimates about that
and there are variances. But the finance minister promised to take
action to prevent creation of Black Money. He also told Rajya Sabha
that there are two ways before the Government, to unearth the Black
Money: one way is to find out the Black Money and confiscate, the
other route is for the Income Tax Dept., to gather the details of
the Black Money through the computerized system. He also informed
that till recently Swiss Banks adopted the policy of not revealing
any name of secret accounts in their
-
Banks but there is some change (relaxation) in their policy due
to world financial crisis and also on account of pressure by OECD
Countries. But the relaxation relates only to the Double Taxation
Avoidance Agreement. Such agreements are there at least among 76
countries. Telling about Black Money passing through the route of
Mauritius, he as external affairs Minister in the last UPA
Government started taking some action to prevent it. b) Mauritius
and India have a Double Tax Avoidance Treaty. It is reported that
the FDI (Foreign Direct Investment ) flows from Mauritius stood at
Rs.204604 crores (4525 Billion US $) from April 2002 November 2009
period accounting for 44% of the Rs. 4,86,480 crores FDI inflows in
to India during this period. The other big investors included
Singapore, the US, Britain and the Netherlands. While investors got
higher returns on their money in India, those from Mauritius get
even higher returns on their capital as we have a Double Taxation
Avoidance Treaty said Dr. D K Joshi, the Principal Economist of
CRISIL. Of late the Government has reportedly found many cases of
misuse of DTAT with Mauritius including round-tripping and is
working towards revising the treaty to prevent its further abuse by
companies, domestic or foreign. But Mauritius Vice Prime Minister
Ramakrishna Sithanan recently said that he had not received any
complaints from New Delhi about routing investments via his country
to evade taxes. Round-tripping is referred to as routing of
domestic investments through Mauritius to take advantage of the
DTAT to pay lower taxes on profits. c) Indian Prime Minister Dr.Man
Mohan Singh met his British counterpart Gordon Brown on 01-04-09 in
London, before G-20 Summit and called for an International
Agreement on the transparent exchange of information in banking and
the need to deal with the Tax Havens and countries that maintain
banking secrecy. In his view the lack of information about money
flows made dealings
X. SOME STEPS TAKEN BY INDIA (UPA GOVERNMENT) AGAINST THE TAX
HAVENS
a) Union Finance Minister Pranab Mukharjee on 14-07-09 informed
Rajya Sabha that till now the Central Government never undertook
the task of studying how much Black Money was there inside and
outside India in foreign banks, though some private individuals and
organizations have given some estimates about that and there are
variances. But the finance minister promised to take action to
prevent creation of Black Money. He also told Rajya Sabha that
there are two ways before the Government, to unearth the Black
Money: one way is to find out the Black Money and confiscate, the
other route is for the Income Tax Dept., to gather the details of
the Black Money through the computerized system. He also informed
that till recently Swiss Banks adopted the policy of not revealing
any name of secret accounts in their Banks but there is some change
(relaxation) in their policy due to world financial crisis and also
on account of pressure by OECD Countries. But the relaxation
relates only to the Double Taxation Avoidance Agreement. Such
agreements are there at least among 76 countries. Telling about
Black Money passing through the route of Mauritius, he as external
affairs Minister in the last UPA Government started taking some
action to prevent it.
-
b) Mauritius and India have a Double Tax Avoidance Treaty. It is
reported that the FDI (Foreign Direct Investment ) flows from
Mauritius stood at Rs.204604 crores (4525 Billion US $) from April
2002 November 2009 period accounting for 44% of the Rs. 4,86,480
crores FDI inflows in to India during this period. The other big
investors included Singapore, the US, Britain and the Netherlands.
While investors got higher returns on their money in India, those
from Mauritius get even higher returns on their capital as we have
a Double Taxation Avoidance Treaty said Dr. D K Joshi, the
Principal Economist of CRISIL. Of late the Government has
reportedly found many cases of misuse of DTAT with Mauritius
including round-tripping and is working towards revising the treaty
to prevent its further abuse by companies, domestic or foreign. But
Mauritius Vice Prime Minister Ramakrishna Sithanan recently said
that he had not received any complaints from New Delhi about
routing investments via his country to evade taxes. Round-tripping
is referred to as routing of domestic investments through Mauritius
to take advantage of the DTAT to pay lower taxes on profits. c)
Indian Prime Minister Dr.Man Mohan Singh met his British
counterpart Gordon Brown on 01-04-09 in London, before G-20 Summit
and called for an International Agreement on the transparent
exchange of information in banking and the need to deal with the
Tax Havens and countries that maintain banking secrecy. In his view
the lack of information about money flows made dealings with the
financial crisis difficult. Thus the question of banking
jurisdiction that refuse to provide information has come to the
fore as one of the issues in the G-20 Summit.
d) After G-20 Summit, leaders announced a plan to impose
sanctions against Tax Havens. The OECD, which is a grouping of
developed countries, released the list of black listed countries.
This development gave India helping hand in tacking the problem of
Black Money. There are allegations that India was not active like
Germany, France, UK, US in unearthing Black Money abroad as itself
officially permitted it through Mauritius route and also through
Participatory Notes (P Notes) and they also allege that that was
why there was an uproar in powerful circles when there was a curb
put on P Notes by the SEBI (Securities and Exchange Board of
India). e) Meanwhile the BJP appointed Task Force on Black Money
came out with many suggestions. It suggested Voluntary Disclosure
of Black Money Schemes. The depositors of Black Money should be
given six months' for disclosure of the information and the Govt
should collect Tax on it and they should be given amnesty. This was
bitterly opposed by the Left Parties. f) When India approached the
Swiss Authorities for information about the secret accounts of the
Indians in August, 2009, the reply was: Swiss Laws and even OECDs
Model Tax Convention do not permit fishing expedition. In other
words, the indiscriminate trawling through Bank Accounts in the
hope of finding something interesting. This means that India cannot
simply throw its telephone book at Switzerland and ask if any of
their people have a bank account here said a top official at Swiss
Bankers' Association (SBA) at Basel, Switzerland. But the SBAs Head
of International Communications, James Nason clarified that the key
for the exchange of information in tax matters is the Double
Taxation Avoidance Agreement between Switzerland and India.
Switzerland provides international legal assistance in criminal
cases and in tax
-
matters and any country may lodge a request for such assistance
through the official channels. Then asked how the USA was supplied
with the information, Mr Nason clarified The basic principles
remain intact even following the recent agreement with the USA and
the privacy of bank accounts, innocent of any wrong doings, remains
protected and the privacy remains the natural state of affairs. No
one not even the Swiss Tax Authorities has an automatic right of
forced entry into a clients bank account without first satisfying
the requirements and conditions stipulated by Swiss Law. Pranab
Mukherjee, Union Finance Minister immediately responded by telling
the Swiss Banks on 24-08-2009 that his Govt. was not interested in
fishing expedition for details of the money stashed with them but
will work on specific cases. Immediately the left parties
criticized the double standards, of the Swiss Banks. When the US
can get the list of persons who have illegally stashed money in
Swiss Banks, why not the Indian Government ? and asked the Indian
Govt. to take necessary steps. The BJP asked India to mount
diplomatic pressure on Switzerland. There were demands not only by
political parties, but by some NGOs and intellectuals, by way of
round tables etc., to unearth the Black Money. Prof.R.Vaidyanathan
of IIM (Indian Institute of Management) Bangalore, while delivering
a Nani Palkiwala memorial lecture on Tax Havens and the illegal
wealth of India in Chennai on 29-8-09 demanded not to retrieve the
frozen wealth and the Swiss Banks should be the top priority of the
Govt.
g) The Finance Minister said on 31.08.09 that India will begin
in December, 09 its first round of consultations with the Swiss
Govt., on the tracing Black Money stashed by Indians in Swiss Banks
to evolve a legal system that could be evolved through an amendment
to the Double Taxation Avoidance Treaty with Switzerland to
incorporate disclosure clause to force Swiss Banks to share
information about account holders suspected of parking illegal
money, on the model of the agreements reached with OECD countries.
But the Communist Party of India urged the Govt., to desist from
its moves to opt for double taxation system as the system was
proved ineffective in countries where it was operational. It is to
be noted that India has such Double Taxation Avoidance Treaties
with 77 countries including Switzerland. The Swiss Govt. hoped that
the new DTAT will help India to trace Black Money and it will be
finalized by 2010. The new treaty will be evolved by renegotiating
the treaty which was signed in 1995. On claims made by various
political parties in India and also by India and foreign think
tanks that the Black Money stashed in Swiss Banks by Indians
exceeding one Trillion Dollars, the Swiss Banks have asserted that
there was no truth in the claims and no black money statistics
exist. h) By the end of Sept. 09 Switzerland has inked Double
Taxation Avoidance Agreements with 12 countries, containing a
clause on extended administrative assistance in the matter and such
agreements will be signed with some other countries of OECD so that
its name can be removed from the grey list of OECD secretariat.
These countries include US, UK, France, Denmark, Luxemburg, Norway,
Austria, Mexico, Finland, Spain, Islands, Qatar. On 27-09-09 the
SBA (Swiss Bankers' Association) gave the following figures about
the foreign Swiss Money. 2237 Billion Swiss Francs (over Rs.
1,00,00,000 crores) assets were held on behalf of foreign clients
as on June, 09 which represents 56% of all funds holding in Swiss
Banks. Out of the above, 694 Billion Swiss Francs over Rs 30,00,000
crores were held in the foreign private clients. But they did not
give out the details of the assets held by the Indians. They also
mooted a new idea. As
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an alternative to the information exchange Swiss Banks have
mooted the idea of a universal withholding tax-wherein they would
tax the earnings generated from the wealth of foreigners deposited
with them and transfer the proceeds to the Govt. of the country
concerned. They are discussing the same with the relevant
authorities. India has determined to renegotiate Double Tax
Avoidance Agreement signed with 77 countries in order to unearth
the Black Money. i) Accordingly India started renegotiations for
bilateral Tax Treaty with Swiss Bank Association and other
authorities. SBA Spokes person James Nasen said on 21-02-2010 that
any country seeking secret account details must be specific with
names of individuals and the Bank involved. New treaty with India
would be based on OECDs Model Tax Convention. Thus Swiss Banks
agreed to give stash information in the back drop of the
re-negotiations to revise the bilateral Double Taxation Avoidance
Agreement (DTAA).
XI. BETTER ATMOSPHERE PREVAILING AT PRESENT TO UNEARTH BLACK
MONEY a) Though there are many Tax Havens in the world, Switzerland
is the most important one. It can be said that Switzerland was a
pet of western capitalism. During the Second World War, both Allied
and Axis powers, though at war with each other, used to love that
neutral small nation, which has been keeping its neutrality since
the Napoleon days. Thus for so many tax evaders and for so many
countries from the West and East it became a Tax Haven. b) But
things have changed. World financial crisis gave a beat not only to
the most developed countries such as USA etc., but also to the
developing countries such as India. To come out of the financial
crisis, every nation, especially the western powers viz., USA,
Germany, France, UK are eyeing on Switzerland and the Swiss Banks.
The Swiss Banks as well as Swiss Government are not willing to
cooperate to reveal the names of the secret bank account holders
and Switzerland became a hate object for them. c) Germany first,
France next, the USA later and UK as the latest, individually and
jointly began to pressurize the Banks and the Government and in
fact declared a war against them to get the names of the Black
Money account holders. Though both the Banks and Govt.,first
refused and dodged to reveal the names, later, after taking many
coercive steps, the Swiss govt., and especially the powerful Swiss
Bank UBS agreed to give the necessary information regarding clearly
5000 names of the US citizens. d) The Guardian (English daily)
wrote on 4-3-2009: The European leaders grew increasingly agitated
at how Tax Havens have been fostered secrecy that has contributed
to the collapse of the banks world over.It estimated the
unaccounted Global wealth in Secret Havens including Switzerland at
$13 Trillion. The annual tax evasion on the dirty fund, estimated
at $ 235 Billions, which was twice the Global Budget of poor
nations. e) Der Spiegal, a German magazine on 3-3-2009 reported
that cash strapped Governments around the world see the opportunity
to finally put an end to Bank secrecy to access the money
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concealed by their nationals. It also added the British Prime
Minister Gordon Brown, French President Nicholas Sarkozy and German
chancellor Angela Merkel are now joining forces and they have set
their sights on Switzerland. The fight against the Swiss Bank was
started in 2008 by Germany, when its intelligence bribed an
informant in LGP Bank in Liechtenstein and got a CD containing the
names of some 1500 tax dodgers and raided half of them who were its
citizens. Germany pressed the OECD (Organization of Economic
Cooperation and Development) to black list Switzerland, a member of
OECD for protecting the tax dodgers. Two thirds of the Swiss
population speaks German.
f) The European leaders moved the matter at the preparatory
meeting of the G-20 Summit in Berlin in February 2009 and started
global crusade against the Tax Havens at G-20 Summit in London in
April 2009. Even they did not allow Switzerland to present its
arguments at the London Summit. g) Spiegel, the German magazine
wrote that for generations, the Switzerland held bank secrecy as
not negotiable and said that it was no longer so. Swiss Finance
Minister said that they would have to compromise. The Swiss Justice
and Foreign Minister had hinted that his country might have to stop
protecting Tax dodgers. Prime Minister Gordon Brown had a deal with
the Swiss Banks on 14-3-2009 in which Swiss Banks agreed to adopt
the bank transparency rules of OECD countries. Brown said it was
the beginning of the end of bank secrecy. The US is going ahead
with a Law to punish Banking secrecy. The British Prime Minister
Brown has pleaded for not black-listing Switzerland. h) Leaders of
the G-20 economic powers launched a campaign in April 2009 to name
and shame Tax Havens and penalize those who fail to tighten tax
standards and transparency. Similarly the OECD in April 2009
published a list of Tax Haven countries which fell short of the
full compliance with international agreed tax standards. More than
a dozen Caribbean countries and Bermuda were on the list. But the
Banks in those countries reject the accusations as one-sided
whitch-hunt against them. But the Governments have scrambled to get
themselves dropped from the damning OECD non compliance list. The
Caymans and the British Virgin Islands could get their names
deleted from the list in July 2009, after signing at least 12
bilateral tax agreements in line with OECD standards. Bermuda also
could achieve this. The other Caribbean countries also followed
suit. i) Patrick Odler, head Swiss Bankers Association said we, the
banks must introduce a new business model where tax honesty is the
goal, when new money is taken in. Thus the Swiss Banks are
considering plans to require their foreign clients conform to
personal taxation requirements abroad. j) It is to be noted that at
the G-20 Summit on 10-11-09, it was agreed that a Tool box of
measures would be used to get countries to comply with an exchange
of information to end bank secrecy, which has been a foundation of
tax evasion.
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k) The OECDs update Overview of the OECDs work on countering
International Tax Evasion (Nov 2009) highlighted the progress made
in its efforts in bringing all OECD countries accepting Exchange of
information requiring in accordance with article 26 of the OECD
Model Convention . Hong Kong, Macao (both Chinese territories) and
Singapore have agreed to bring the necessary legislation to comply
with this. Australia, Belgium, Bermuda, British Islands,
Switzerland, Luxemburg, Netherlands, Antilles, Cayman Islands and
Bahrain are also positive. The EU has also taken certain measures
in this regard which included: 1) Introduction of a common
consolidated Corporate Tax base for EU business (CCCTB).
2) Treatment of cross border activities among the EU members as
similar to domestic activities. 3) simplification of the tax
environment and creation of a level-playing field 4) Application of
the Home State Taxation approvals 5) Introduction of clear VAT
(Value Added Tax) Rules concerning International Services and
Financial Services 6) Providing for exemptions among member
countries on assertive and reciprocal basis l) The opposition BJP
made the issue of Black Money an Election Issue. BJP leader LK
Advani owed to bring back the Black Money stashed in Swiss and
other foreign banks. The BJP not only made it a point in its
Election Manifesto, but appointed a Task Force headed by Prof.
R.Vaidyanathan, Prof of Finance at the Indian Institute of
Management, Bangalore. L.K.Advani raised the Black Money issue in
Parliament in March, 2010 and demanded the Government to publish a
White Paper on this issue. m) On account of the Black Money and
Fake Currency, our Nation is incurring a loss of Rupees 10 lakh
crores annually. The amount of black money is estimated to be Rs.
25 lakh crore or 500 billion US dollors. It will be about 40% of
G.D.P. (Gross Domestic Products). Though the actual figures are not
available Prof. Arun Kumar of Jawaharlal Nehru University, New
Delhi said the amount of black money will be 40% of G.D.P. which is
Rs. 61,64,000 crores. If the Black money is converted into white,
the tax collection will be Rs. 7.50 lakh crores. XII. CONCLUSION a)
There cannot be a second opinion that the Black Money has become a
threat to our nation. So, it is essential to identify the
individuals and the business organizations etc, who stashed money
in foreign banks especially in Swiss Banks, Mauritius etc. and
bring back it and to punish them and to prevent such stashing in
future. But this is not an easy task as bigwigs will be naturally
involved in this Black Money activity and it requires hard
decisions and great guts to take action against them. b) There was
news that the Central Govt has collected the information about the
names and the organizations which stashed away moneys in Swiss
Banks about 15 years back as disclosed by a top retired official of
the Central Revenue Department. But the various Govts. that ruled
this nation for the last 15 years utterly failed in this matter.
But BJP top leaders like LK Advani,
-
who ruled this country as Dy PM and Union Home Minister, who
kept quiet while in power, raised this issue during the 2009
General Elections evidently to gain politically, utterly failed.
The attitude of the various Congress Govts at the Center also
failed to give confidence to the people on this issue, even though
this issue has not cropped up suddenly. The ruling Congress Party
failed to reject a news item published in a popular Swiss magazine,
Schweitzer Illustrierte, dated 11-11-1991 which published the name
of Rajiv Gandhi along 13 other world leaders who stashed away Black
Money in Swiss Banks. The amount mentioned was 2.5 million Swiss
Francs. Even our Supreme Court found fault with the present UPA
Govt for its failure to take proper action against one Pune
business man Hassan Ali, who was evidently said to have stashed
away Black lakhs of dollars in Swiss Banks.
c) The Prime Minister Dr. Man Mohan Singh and finance minister
Pranab Mukherji,. more than once expressed their commitment to
unearth the Black Money stashed in Swiss and other foreign banks.
But the proclamations should be followed by action. d) This is the
most opportune time as the USA, Germany, France, UK faced with
financial crisis and peoples anger have succeeded to get the names
of their citizens who stashed away money in foreign banks including
Swiss Banks. The USA had initiated the necessary action against
some of the culprits. The Swiss Banks cannot avoid or escape now
from giving the necessary information about the Indian citizens who
deposited secret amounts in their Banks. e) The whole credit will
go to the present UPA Govt., if it succeeds on the Black Money
issue. If it fails, it has to carry lot of discredit. In the
interest of our nation, it is also necessary to tackle another big
problem which is threatening our country i.e., the problem of Fake
Currency. XIII SCAMS IN INDIA FROM 1992 TO 2009 A. Details of
various scams that took place in India from 1992 . (Total amount
involved in the scams Rs.73 lac crores). In 1992 : Harshad Mehta
Securities Scam. Money involved Rs.5000 crores 1994 : Sugar Import
Scam. Rs.650 crores (Food Minister Kalpanath Rai presided over the
import of sugar at a price higher than that of the market, causing
a loss of Rs.650 crores.) 1995 : Preferential Allotment Scam.
Rs.5000 crores. Yugoslav Dinner Scam. Rs.400 crores. Maghalaya
Forest Scam. Rs.300 crores. 1996 : Fertiser Import Scam. Rs.1300
crores, urea Scam. Rs.133 crores, Bihar Fodder Scam. Rs.950 crores.
1997 : Sukh Ram Telecom Scam. Rs.1500 crores, SNC Lavlin Power
Project Scam. Rs.374 crores, Bihar Land Scandal. Rs.400 crores, CR
Bansali Stock Scam. Rs1200 crores. 1998 : Teak Plantation Swindle.
Rs8000 crores. 2001 : UTI Scam. Rs 4800 crores. Dinesh Dalmia Stock
Scam. Rs 595 crores, Ketan Parekh Securities Scam. Rs 1250 crores
(Ketan Parekh followed Harshad Mehtas foot steps to swindle crores
of rupees from banks. Ketan targeted smaller exchanges like the
Allahabad Stock Exchange and the Culcutta Stock Exchange. He
borrowed Rs 250 crores from Global Trust Bank).
-
2002 : Sanjay Agarwal Home Trade Scam. Rs 600 crores (He was an
accused in the Rs 92 crores Seimens Provident Fund Scam because the
CBI failed to charge sheet him in 60 days as required. The CID
alleges that Agarwal did not deliver Govt securities against this
amount to the NDCCB as promised. Agarwal had surrendered to a court
in Nagpur on May 11th after the Scam broke). 2003 : Telgi Stamp
Paper Scam Rs 172 crores (The Telgi case is another big Scam that
rocked India. The fake stamp paper racket involving Abdul Kareem
Telgi was exposed in 2000. The loss is estimated to be Rs 17.33
crores. Between 1992 and 2002, 12 cases were registered against
Telgi relating to counterfeit stamps in Maharashtra, but the lack
of serious action suggests that the scamster had mastered the
technique of corrupting the system.) 2005 : IPO Demat Scam Rs 146
crores. Bihar Flood Relief Scam Rs 17 crores. Scorpene Submarine
Scam Rs 18,978 crores ( the three billion dollars Rs 13,000 crores-
Scorpene Submarine deal has come under a cloud even as India is
scheduled to sign the formal contract with French company Thales.
The company is in the midst of a corruption scandal involving sales
of weapons.) 2006 : Punjabs city Center Scam Rs 5000 crores. Taj
corridor Scam Rs 175 crores (TheTaj Corridor Project proposed to
give a face lift to the areas surrounding Agras major monuments
along the River Yamuna. Included in the venture was blue print for
a swanky shopping mall. The plan was put forward by the Central
Pollution Control). 2008 : Hassan Khan Tax Default. Rs 50,000
crores. The Satyam Scam. Rs 10,000 crores. Army Ration Scam Rs
5,000 crores. The 2-G Spectrum Swindle Rs 60,000 crores. State Bank
of Saurashtra Scam Rs 95 crores. Illegal moneys in Swiss Banks as
estimated in 2008 Rs 71,00,000 crores. 2009 : Jarkhand Medical
Equipment Scam Rs 130 crores, Rice Export Scam Rs 2500 crores.
Orissa Mines Scam Rs 7000 crores. Madhu Koda Mining Scam Rs 4000
crores ( Madhu Koda has been charged with laundering whopping Rs
4000 crores through Hawala transactions and secret bullion trade ).
B. What Rs 73 lack crore scam money can do in India? MAKE : 2.4
crores primary health care centers CREATE : 24.1 lakh Kendriya
Vidyalayas at a cost of Rs 3.02 crores each, with 2 sections from
class VII to XII. CONSTRUCT : 14.6 crore low cost houses assuming a
cost of Rs 56 lac a unit . SET UP: 2,703 coal - based Power Plants
of 600 MW each. Each costs Rs 2,700 crores. SUPPLY: 12 lakh CFL
bulbs. That is enough light for each of Indias 6 lac villages. SET
UP: 14.6 lac of 2 lane high ways. That is a road around Indias
perimeter 97 times over. CLEAN - UP: 50 major rivers for the nest
121 years, at Rs 1,200 crores a river every year. LAUNCH : 90 NREGA
Style Schemes, each worth roughly Rs 81,111 crores. ANNOUNCE : 121
more loan waiver schemes. All of them worth Rs 60,000 crores.
DONATE : Rs 56,000 to every Indian. Even better, give Rs 1.82 lakh
to 40 crore Indians living below poverty line. (Courtesy TOI)
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BOOKS BY THE AUTHOR NAGESWARA RAO GUDAVALLI
1. On current issues 1996 (Essays on International, National and
Regional problems) 36 Artciles - 132 Pages.
2. On current issues 1998 (Essays on International, National and
Regional problems). 31 Artciles - 120 Pages.
3. On current issues 1999 (Essays on International, National and
Regional problems).28 Artciles - 148 Pages.
4. On current issues 2000 (Essays on International, National and
Regional problems, Regional Economic Groupings).
62 Artciles - 140 Pages.
5. On elections in U.S.A. - 2000 - 44 pages
6. On World Trade Organisation - 2003. - 36 pages.
7. NATO expansion, consequences - Disintegration of Yugoslovia -
1999 - 24 pages.
8. On India - China And Indo - U.S. Relations - 2005 - 77
pages.
9. On Indo - Pak And Indo - Nepal Relations - 2005 - 97
pages.
10. On Uni - Polar world and on Developments in Iraq and Iran -
2005 - 122 pages.
11. On West Asian Crisis - 2005 - 52 pages.
12. On World Social Forum and Dual Citizenship - 2005 - 46
pages.
13. On U.N.O. and European Union - 2005 - 80 pages.
14. On International Terrorisim - 2005 - 40 pages.
15. Inter - linking of Rivers in India - 2005 - 40 pages.
(All the above are in Telugu).
16. 50 + Current International Issues in English - 2008 - 210
pages.
17. On Controversial Seshu - Samudram Project in Telugu - 2008 -
26 pages.
18. The Tibet Controvery and Georgia -
Russia Conflict and After, 2009 May - 42 pages
19. Global Warming & Climate Change and Arctic Conflict in
the Making, 2009 August 44 pages.
-
20. Racial Attacks on Indian Students in Australia - 36
pages.
and US-China or Cina-U.S. Relations - 36 pages.
21. Black Money and Fake Currency, April 2010 - 36 pages.
22. Sea Piracy or Terror on the Seas & Yemen and Terrorism,
August 2010 - 28 pages.
23. India and Its Neighbours - January 2011- 9 articles-172
pages 24. Indo-U.S, Indo-Russian and U.S. Russia Relations.