Bring Black Money Back

"We are absolutely dissatisfied with government's efforts to bring back black money. Why are they not revealing details about who has black money? We will support no such tax amnesty schemes. They are tax evaders and should not be spared," says AB Bardhan, General Secretary, Communist Party of India. Bardhan said, “What is the secrecy about black money? Why are they not revealing the names? Why are they keeping them (names) under sealed cover? We want to know who they are“. Those who had kept money stashed in Swiss bank accounts had done so to evade taxes. “They are tax evaders. They have committed a crime. The fund should be confiscated.”

"The helplessness stemming from Prime Minister's language about the Supreme Court's move to bring back black money stashed away in foreign banks will boost the morale of corrupt people," says Bihar Chief Minister Nitish Kumar.

legal experts say the government is not doing enough and hiding behind the double taxation treaty with Switzerland.

Former attorney general Soli Sorabjee says, "No one had ever brought up or raised the issue. It never came up in public or in court. Now in 2010/2011 this black money issue has reached such gigantic scales. The people of India are entitled to know who the persons who have looted the nation are."

“Government should not only obtain full details of these accounts, but also make the names of the account-holders public and bring the money back to the country for investment in social projects,” says Sitaram Yechury, MP, Communist Party of India (Marxist).

On 19th January, the Supreme Court sought clarity from the government on how it intended to end black money, and wanted to know why it could not reveal the names of people who had stashed away huge sums in foreign banks. The matter came up at 20th January Union Cabinet meeting during a discussion on a proposed tax agreement with the Cayman Islands. The Prime Minister himself raised the subject and expressed concern at the government taking a beating on black money. He has asked Finance Minister Pranab Mukherjee about the progress on the issue.

Mukherjee told the Cabinet that the government had received information about black money accounts in foreign banks on the basis of international treaties that it had signed, and that if such information was made public, no government would share such details in the future. Therefore, he ‘won't publish names'. He stressed that foreign governments had shared this information purely for taxation purposes, and the government intended to honour that provision and not make public the names of the account holders. Mukherjee added that if the court so wished, it could reveal the names furnished to it in a sealed envelope having a list of 26 persons who had accounts with the Liechtenstein Bank.

The Prime Minister says,“We have got some information from one location and that has been provided to us for the collection of due taxes. We cannot use that information for any other purpose and that information cannot be made public,” he said, as the government had made a commitment not to reveal such information. These were treaty obligations, he stressed, adding: “Otherwise, who will respect us?”


The Indian government is clearly under pressure to bring back, black money stashed abroad and with the Supreme Court getting into action, the government has little options but to act fast.

First on the government agenda is to rework India's Double Tax Avoidance agreements (DTA) with tax havens like Mauritius, which is one of the biggest sources of investment into India.

A DTA allows companies that invest in India to be taxed only in the country of their origin. India has signed DTA's with 74 countries. 6 of which are tax havens.

The government wants to follow the example of countries like the USA, which have tightened their DTA's to prevent 'bad apple' companies who might be guilty of tax evasion and money laundering.

India is pushing to add a Limitation of Benefit Clause into their DTA's with tax havens, which will allow them to levy taxes in case they find instances of tax evasion. But progress is slow. Tax havens are reluctant to bring in clauses which may deter new and existing investors.

Progress is also slow in India's global hunt for suspected black money parked in banks across the world.

India is using new found membership of Financial Action Tax Force – a global consortium of more than 120 companies - to get access to bank transactions.

So far, India used its FATF membership to get Switzerland to agree to share information of account holders, and to sign a information sharing agreement with Bermuda.

India now wants to push for signing information agreements with 7 other countries – which include Cayman Islands, Panama and Ireland.

Anouch Zerbib, French Taxation Expert said, "France has got all its money back. French tax authorities has identified € 6 billion in Swiss accounts and they have been able to get back € 700 million. But France had to talk to Swiss authorities and ensure there were no obstacles. A similar agreement was signed between India and Switzerland in 2010."

"So India can now put pressure on Swiss for the money. It's complicated and will take time for the money to be returned. It can be considered as money laundering. India can get back the black money in due course of time," added Zerbib.

Daniel Fischer, Head of Fischer & Partner said, "In this case, Swiss lawyers might try to inhibit India in getting black money back. Principally, it's a criminal act, it is a tax fraud. India has a good chance of getting its money back. We are not a country where criminals are protected."

In the course of the hearing on a petition filed by the former Union Law Minister, Ram Jethmalani, and others, Justice S.S. Nijjar asked Solicitor-General Gopal Subramaniam on 19th January: “Why are you limiting the matter to the Liechtenstein Bank?”, “All we want is that you give all information about the money deposited in the foreign banks by Indians. You cannot confine the petition to one bank.” Even the Finance Minister is also doing the same.

Senior counsel Anil Divan, appearing for petitioners, said they had sought 21 documents and letters, including the government's communication with German authorities, UBS AG Switzerland and LGT Bank, Liechtenstein, a tax haven, but only five documents were furnished.

The petitioners had also sought certain documents in the case registered against Pune-based businessman Hasan Ali Khan, against whom the Enforcement Directorate lodged a complaint for violating the Foreign Exchange Management Act to the tune of Rs. 36,000 crore.

Divan said: “Not a single individual whose name is allegedly given by the German government has been proceeded against; no vigorous steps are being taken against Hasan Ali Khan and he is not being custodially interrogated.” The Centre had taken cover under the double-taxation avoidance agreement with the mala fide intention of concealing information from the public. For, the issue of tax avoidance had no relevance to the source of money, counsel said.

Subramaniam will give further reply on January 27.

Rudolf Elmer, a Swiss bank staffer has handed over details of 2,000 secret Swiss bank accounts to whistle-blowing site WikiLeaks, claiming the list, contained in two compact discs, included names of about 40 politicians, multinational companies and financial institutions from Asia, Europe and the United States. He as created a website: http://www.swisswhistleblower.com/


Elmer revealed it in his Wikileaks article that Zurich made investment decisions and then directed the Cayman office to enter them into the computer as if they'd been done locally-- which disqualifies the transactions from being exempt from Swiss taxes.

WikiLeaks founder Julian Assange said he would publish it as he wanted the world to know the truth about money concealed in offshore accounts, how they evaded taxes and the systems in place to keep this secret.

“More people will follow suit. There are employees in banks not just in the Cayman Island (where Elmer had been based) who know that there employers are engaged in criminal activities and would like to leak high level information but haven't been able to,” said John Christensen, the director of Tax Justice Network, an international organisation devoted to research and analysis in the field of tax regulation, avoidance and evasion.

Christensen is due to speak at a conference in New Delhi next month.

“We regularly work with people in the off shore arena who wanted to leak information, but we were unable to because we weren't geared for it,” he added.

“This sends a clear message to banks: don't assume you can maintain secrecy firewalls.”

On 17th January, Elmer – a former compliance officer of Swiss bank Julius Baer – handed over two CDs containing the files to the WikiLeaks founder. Elmer, who has already spent 30 days in a Swiss prison for breaking the nation's famed banking secrecy laws, is now under arrest in Switzerland, for leaking the details to WikiLeaks. Elmer has been given a suspended fine of 7,200 Swiss francs for breaking banking laws by a Zurich court.

Christensen, a former economic advisor to the island of Jersey, called on the Indian Government to do more in the fight against tax evasion.

“India, as a member of the G20 is in a powerful position to push for far stronger cooperation. India should not be settling for weak treaty processes, but demanding the automatic exchange of information,” he said referring to the amendments currently going through on the country's double taxation treaty with Switzerland.

Earlier this week, the Swiss Federal Assembly's Committee for Economic Affairs and Taxes said it was passing an amended version of the treaty which would give Indian authorities access to details of Indian clients suspected of evading taxes.

Christensen said that as the changes would enable information sharing on a specific, case-by-case basis, they did not go far enough. “India should be demanding automatic information exchange and on a multilateral basis,” he said.

A spokesman for the Swiss committee, CEAT said that the legislation would likely go through the first chamber in February or March, and the second chamber by July.

"The Headlines Today investigation team scanned document after document looking for an Indian connection in the maze of Swiss bank accounts. The channel identified the names of several individuals and firms that could have operations based in India," it said. "The one name that kept cropping up again and again was that of Annapurna." The channel said there were three companies with name -- Annapurna Convertible Ltd (A/C number: 420331), Annapurna Leverage Ltd (A/C number:4270390) and Annapurna Convertible USD (A/C number: 431916) -- with accounts opened in the New York branch of Julius Baer Bank. The three had stashed away $57 million (Rs.259 crore), $18.6 million (Rs.84 crore) and $10.3 million (Rs.45 crore), respectively and all of them were managed by Pius Fisch of Fisch Asset Management.

The other name to come out was that of Asad Ali Khan and his wife Zahida, who was a co-account holder. Khan had siphoned off a huge amount of money to the Julius Baer Bank in Cayman Islands. 'He and his wife were directors of a company named Unicorp Services in Cayman Islands,' the channel said, adding: 'Of course, there was no way to prove whether Khan was the real identity of the person who opened the account or who was behind Annapurna.'

Source: Various news reports from The Hindu, NDTV, ET, Indian Express, Headlines Today

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