Getting India’s money back from tax havens-Arun Shourie & Public Opinions

Stupefied by the string endorsement all across the country of the demand that the money looted from India must be brought back, the Congress has tied itself in knots.

Its spokesmen — led, as will be clear from the arguments they have advanced, by four lawyers — have given five reactions:

● Why is Advani taking up this matter now, on the eve of elections?

● The G20 meeting was not the proper forum for taking up the issue.

● There is doubt about the figures.

● Why did the BJP government replace FERA by FEMA, and thereby make the offences compoundable?

● Is Advani not unwittingly alerting those with illegal money abroad to spirit it away from Switzerland to other tax havens?

● What was the NDA doing when it was in office? In any case there is doubt about the figures.

The reactions betray panic as even the littlest reflection would have shown the ‘arguments’ to be indefensible. Let us consider them one by one.

Why is Advani taking up this matter now, on the eve of elections?

The fact, of course, is that Advani took up the matter with the prime minister in April last year. He wrote to Manmohan Singh soon after it became known that the Government of Germany had succeeded in obtaining names of persons who had stashed money in the LGT Bank in Lichtenstein. The reply that P Chidambaram, the then finance minister, sent him showed that the government intended to do little except keep going through the pretence of taking some steps. Soon thereafter, we were alarmed to learn that a senior official of the finance ministry had written to the then Indian Ambassador in Germany not to press the Germans for release of the names of Indians in the list that they had obtained from Lichtenstein — lest the Germans take offence and conclude that they were being pressurised and their bona fides were being questioned! (This information was later confirmed by report filed by Amitabh Ranjan in The Indian Express of March 31, 2009.) Subsequently, we took up the matter in Parliament also. And yet the evasion, “Why now?”

The G20 meeting was not the proper forum for taking up the issue

This customarily self-serving rationalisation was put out by one of the Congress party’s lawyers and spokesmen. At this very time the party was trying to insinuate that, actually speaking, the prime minister had taken up the matter at the G20 Summit. As its spokesmen could not point to any statement he made either at the Summit or at a press meet by the PM that followed, they drew solace from a passing reference to the matter in the speech he had made at the dinner hosted by Gordon Brown.

In any case, if the G20 Summit was not the right forum for taking up this matter, how is it that in the communiqué that the G20 leaders issued on April 2, 2009, in paragraph 15, entitled, “Strengthening the Financial System,” they pledged themselves “to take action against non-cooperative jurisdictions, including tax havens. We stand ready to deploy sanctions to protect our public finances and financial systems.

The era of banking secrecy is over. We note that the OECD has today published a list of countries assessed by the Global Forum against the international standard for exchange of tax information”.

Were they also, in the view of the Congress party, acting inappropriately when they made such a strong commitment in their communiqué at the Summit? And recall that no sooner had they issued the threat of imposing sanctions that countries which had been blacklisted by the OECD that very day began declaring that they would indeed sign up on the agreement to exchange tax information, and that includes evasion.

In any case, there is doubt about the figures

As is its custom, the Congress is trying to cover up the basic question of the money which has been looted from India and is lying in tax havens, by raising questions about the precision of figures and estimates. This is exactly the kind of legalisms with which persons like P Chidambaram and other legitimisers were fielded to cover up the loot from Bofors.

In its paper, “Overview of the OECD’s Work on International Tax Evasion,” the OECD itself lists studies that state that there are $1.7 trillion to $11.5 trillion which are today parked in tax havens. This paper of the OECD has been widely reported in the Indian press.

The basic point is: even if the amounts are just a few scores of billion dollars and not one and a half trillion dollars, why should they not be brought back to India? And the fact is that other countries, much smaller countries with none of the pretensions of being a superpower, have succeeded in getting their money back. Even as of October last year, when the OECD released its paper, little Ireland had succeeded in recovering almost a billion Euros through an investigation into offshore banks.

Given that even small countries like Ireland have got money back, is it not a shame, is it not an outrage that, as of Saturday last, April 18, 2009, The Times of India, should be quoting the Swiss Ambassador to India as stating on record that till now, the Swiss government has received no request — not even a request — from the Indian government? The real question is different: can the money looted from India be brought back to the country when the attitude of the government continues to be as determinedly inactive as that of the present government? Can the government which allowed Ottavio Quattrocchi to take his money out of banks — where it was lying frozen on court orders — be trusted to bring back the loot that is lying in Swiss banks and other tax havens? Can the government which prostituted the CBI so that he may get away from Argentina be trusted to bring the loot back?

Why did the BJP government replace FERA by FEMA, and thereby make the offences compoundable?

Again, the Congress is relying on the short memory of its audience. The fact of the matter is that no one had been pressing more for the replacement of the harsh provisions of the Foreign Exchange Regulation Act (FERA) than the Congress itself. The changes were being contemplated since 1996. The demand for doing away with the harsh provisions came to a crescendo during the government of V P Singh when FERA came to be used for interrogating captains of industry — like S L Kirloskar — under harsh circumstances. As news reports of that period themselves indicate, the Foreign Exchange Management Act (FEMA) which was approved by the government in July 1998, was on the lines of a draft which had been prepared under the leadership of the preceding finance minister, P Chidambaram. Even today, you can go to the website of Rediff, go to their dispatch of July 25, 1998, on “FEMA, Money Bills: Cabinet nods, Parliament’s turn next,” and you will read, “The Bills were broadly on the lines of a draft prepared under the leadership of then finance minister Palaniappan Chidambaram.” In any event, there is no mystery about the reasons on account of which the law was changed. They are well set out in the following passage: “Until recently, we had a law known as the Foreign Exchange
(Regulation) Act. Its object was to conserve and augment the forex reserves of the country. The way to hell, it is said, is paved with good intentions.

Like many well-intentioned laws, FERA paved the way to disaster. FERA created a flourishing black market in foreign exchange. It brought into the economic lexicon the word ‘Hawala’. Illegal forex transactions became the fuel for the growth of crime syndicates with transborder connections.

“FERA also became a tool of oppression.

Successive governments persisted with FERA and added COFFEPOSA and SAFEMA.

International markets do not respect draconian laws that run counter to common sense. India’s reserves, far from being augmented, dwindled at an alarming rate… Mercifully, FERA was buried finally on May 31, 2000.” When and where was this written? In an article that appeared in The Indian Express on August 25, 2002. Who wrote the article? None other than P Chidambaram!

Is Advani not unwittingly alerting those with illegal money abroad to spirit it away from Switzerland to other tax havens?

Another clever little statement by yet another clever lawyer of the Congress party! Would the looters who have stashed away money in tax havens from India still need to be alerted after Germany got the names from Lichtenstein as long ago as last year? Would they still need to be alerted after Germany offered to furnish the names to governments that asked for the names? Would they still need to be alerted after the United States got the names from the leading bank of Switzerland, UBS in February this year, and got it to submit to paying a fine of $ 800 million to boot? Would they still need to be alerted after the G20 leaders, including Manmohan Singh as the Congress would like to remind us, declared their determination to get the tax havens to disgorge the names? But such is the confusion in the Congress party and such the brilliance of its lawyers that all it can do is to seek to deflect the nation-wide demand for getting the loot back from tax havens by such witticisms!

What was the NDA doing when it was in office? In any case there is doubt about the figures

Leaders of the Congress party would be better advised to ask, “During that very period, what was the Congress party doing, what were its lawyers and leaders doing, to thwart the efforts of the NDA government to uncover the names of persons who had looted the country even on defence deals like Bofors?” But even if the NDA had done nothing — whether on terrorism or money abroad — is that any reason for not hurrying to avail of the unique opportunity that has arisen now? Even while replacing FERA by FEMA, the NDA government made sure that it would have an additional two years to file prosecutions under FERA. And it filed 2000 cases against those who were under investigation before FERA lapsed. The reason for doing so, a reason that is well known to lawyers in the Congress party, was that, when a prosecution is filed it is adjudicated according to the law which prevailed at the time at which the case was filed.

These are the very cases which the Congress later on did not pursue.

The fact of the matter is that it is now that the unique opportunity has arisen to get the loot back: Germany has succeeded in getting the names; the US has succeeded in getting the names; the G20 leaders have pledged themselves to ensure the end of bank secrecy; countries that had hitherto refused to share the requisite information are pledging to do so — within a week of their names being published by OECD in the list of countries that were dragging their feet on the question, Costa Rica, Malaysia, Philippines and Uruguay pledged to enter into the relevant agreements.

Conclusion

There is a real fight ahead: a fight in the national interest, a fight that will have to be waged doggedly to get the names from the tax havens and to get the amounts back to India — as tax havens will not easily part with their route to lucre. And not all countries will be eager to wage the fight — so many rulers in Africa, in Latin America, to say nothing of the princelings of China — will be loath to see the fight succeed. So, determination and leadership will be required of India, and persistence, and forging alliances with civil society in Europe and elsewhere.

Nor are bilateral agreements any substitute to multilateral pressure. With close to seventy tax havens, decades will pass before agreements are concluded with each haven, even as money is spirited from the haven that has signed up to the one that is holding out.

As has been correctly emphasised, a consensus is already emerging across the country.

Leaders outside the political realm, parties such as the CPI(M), SP, BSP, JD(U), AIADMK have all demanded that the government act energetically to get the names from the tax havens and to get back the amounts. Instead of quibbling, the Congress would be well-advised to endorse the consensus, and act on it.

Not joining secular forces on even so secular an issue?!

Opinions:



These are the same leaders who: 1) Stealing the money from the people and after they have done that 2) Get all the major landmarks in the country named after them. What is the other name of "rape"? Congress Raj - specially in its current form.
By Anil
4/25/2009 2:03:00 AM

See what has happened to Vidarbha farmers to whom MMS had personally assured big help which was ultimately pocketed by congress people under the very nose of MMS & he conveniently kept quite.Same thing happened with 'Sarva shiksha abhiyan' & 'rojgar hami yojana' which were declared with much fanfare.This clearly shows even MMS is not different from other corrupt congressies. This makes obvious why congress has negative reaction.Being in absolute power for long time ,they have big interest in the stake.
By ckdandekar
4/24/2009 6:50:00 PM

The communists are the greatest betrayers and anti-nationals since they have their loyalty to China and will sell india to china any day. Corrupt congress and allies have trillions of dollars looted black money in swiss and german banks and only BJP has promised to bring back the trillions dollars within 6 months and to distribute the money to majority poor hindus. further BJP has promised to abolish all minroity privileges and to amke all indians equal unlke corroked congress who made minroity muslims and chsirisnas as super citizens and made majority hindus beggars in the country.ALL MAJORITY HINDUS MUST JOIN THIS INDEPENDENCE MOVEMENT AND VOTE MASIVLEY FOR BJP AND ALLIES TO KICK OUT CORRUPT CROOKED NEHRU DYNASTY AND ALLIES FROEVER FROM OUR HOLY LAND. TIME TO ACT AND SAVE THE NATION HAS COME NOW.
By V.Mehta
4/24/2009 2:22:00 PM

Why majority hindus and patriotc indians must vote as if fighting for their independence from looters and anti-nationals? The fourth front is a bunch of criminals and looters and if given a chance they will sell the country for a few million dollars.What about UPA partners? All the partners of congress, namley Laloo, Mulayam and Paswan are at each others' throats and communists are the greate betrayers and anti-nationals since they have their loyalty to China and wills ell india to china any day. Corrupt congress and allies have trillions of dollars looted black money in swiss and german banks and only BJP has promised to bring back the trillions dollars within 6 months and to distribute the money to majority poor hindus. further BJP has promised to abolish all minority privileges and to make all indians equal unlke Crooked congress who made minroity muslims and chsirisns as super citizens and made majority hindus beggars in the country.ALL MAJORITY HINDUS MUST JOIN THIS INDEPENDENCE M
By V.Mehta
4/24/2009 2:21:00 PM

If Congress comes to power it will try to make it another "bofor saga" as Indian people in general are "guilty of forgiving" when they should not and this has been the cause of their downfall. They need to take more responsibilty in choosing who is to be their leader that can help them look forward.
By Anil
4/24/2009 2:02:00 AM

By the looks of all responses from Congress heavy weights and its bleeding heart supporters, it appears they are still dragging their feet on this important issue when they should have been proactive. Actions speak louder than word and this says it all who is here to plunder India, fill up their kitty when at the same time shouting at the top of their voice that they are working for the "aam admi". Those unsuspecting and honest citizens who still supporting Congress and its allies should think twice before casting their votes to bring them back.
By Anil
4/24/2009 1:50:00 AM

Vasu mate, listen. If this (black money) is not an election issue, then maybe who pregnated your mother and you were born, should be an election issue. Really intersting, isn't it mate? Cool off mate and don't shit in your pants.
By Charlie
4/24/2009 12:15:00 AM

Mr Advani's demand to bring back illegal money to India is a welcome sign. It is stupid to question the timing, yes it is a poll issue and all those who oppose this are bureaucrats and ministers. Too much of mughal, than british and than congress rule has made average Indian stupid and naive. They cannot even ask for their fundamental rights. Dr Robot singh is a shame of country and Sikhism that boasts of bravery. This tooth less dog is always waggling his tail.
By Concerned Indian
4/23/2009 9:15:00 PM

Brilliant article, the mask of Congress party and nehru Dynasty has been torn apart.Such a shame that world renowned economists and PM Robot Singh and Chidambaram were working for their own family and personla welfare and welfare of the Sonia Maino fmily and not for the majority poor of more than 800 million people. The very fact that even now UPA and Sonia Maino government led by PM MM Singh has not asked for releasing the names of indians holding billions of dollars in swiss and german banks shows that they are actively colluding with the himalayan looting of the nation for the past 60 years.Now BJP and NDA must promise all Indians and hindu voters to bring back the looted black money of trillions of dollars back to india and distribute the money to all poor majority hindus and Majority Hindus must vote massively for BJP and allies to kick out Nehru Dynasty forever from our holy land
By V.Mehta
4/23/2009 9:29:00 AM

THIS ISSUE, ALONG WITH FARMER'S SUICIDE & TERRORISM SHOULD BE THE KEY ISSUES FOR DETERMINING THE POLL RESULTS. THESE ARE CORE ISSUES, WHICH ATTACK THE VERY ROOTS OF OUR SURVIVAL AS A NATION, SO ALL THINKING PEOPLE SHOULD GET BEHIND PARTIES FORCING FOR URGENT ACTIONS ON THESE PRESSING ISSUES.
By Ike
4/23/2009 8:08:00 AM

vasu we have very big topic around us ...Leaglised Islamic Terrorism spreading like a Cancer.and this topic can only be handled by BJP and BJP only let MODI come in power,he will answer these Jehadies in a manner they deserve. this half male MMS will do noting but make India a Hijda Country
By Abdul
4/22/2009 5:47:00 PM

I fully suppport BJP on this. Please publish the list of all account sin All national news papers.
By Pushkar
4/22/2009 5:23:00 PM

Those politicians and business who are in this devilish game of stashing away money to safe accounts in foreign banks, are worse than Islamist terrorists of al Qaeda, Lashkar e Toiba, etc. and their co-conspirators within India who are causing so much death and devastion in India. If the present government has done little to counter terrorism in advance or to capture and speedily try and punish terrorists, we cannot expect that it could have brought back the money . In the first place, they allowed the crime against the nation with the kind of meaningless procedures and ineffective laws and a collusive administration merely pleasing the politicians. Total hypocrisy and duplicity of these politicians warrants that they must not be voted to come to power again.
By Muthubalan
4/22/2009 3:29:00 PM

The BJP has completely run out of election issues so it has with the blessings of Arun Shourie,Yashwant Sinha and Arun Jaitley tried to create a red herring about which they have very little information.Such issues always have some emotional appeal to a certain class of voters and causes confusion in the mind of others.What a waste of time !
By vasu
4/22/2009 3:18:00 PM

The expose reflects on the dishonesty of P M and his stooge P Chidambarm. They are the crooks who are responsible for all the economic ills of the country. They were the archetects of stock market manipulation which made smuglers, drug mafia and anti-nationals to play havoc on Indian economy. Though these nefarious activities were in their knowlledge, the duo pretended that it did not exist. With the cooperation of other crooks in the cabinet, they coolly swindled thousands of crores in Spectrum G-2, Satyam, and even from hapless Tsunami victims and Union Carbide gas victims. The perverted media pampered them as intellectuals. What Quetterochi looted, pales into blue compared to What PM & PC combo did to the country. It is a shame that they are asking for another chance to loot the country. For their shameful economic misdamnoers they should jailed for life.
By R.Krishnan
4/22/2009 3:15:00 PM

Shame on Congress. What else you can expect from the 'HONEST" Dr.MMS and his boss Sonia who has no patrotism for this country. Probably the previous FM and his relatives would be topping the list there.
By vasudevan
4/22/2009 1:39:00 PM

Today or tomorrow or day after, its' going to happen..Illegal money stashed over seas will be exposed. This is a good thing emerged during this ongoing recession.