Recovering looted wealth

Congress tasted diamonds, Swiss madhu (honey) and left Koda to face koda (whip): Will RBI investigate?

Rs. 4000 crores loot, still counting...

Swiss bank money finds its way into Indian stock market

SHAILESH

Wed, Dec 16, 2009 15:51:53 IST

THE PUBLIC assertion of L K Advani to bring Indian money stashed in secret bank accounts abroad back into India had unsettled the Congress leadership in no small measure. 

While the Congress stonewalls for some strange reason, not many know that some portion of this money could have already made its way into India through the Participatory Notes (PNs) route. 

It is estimated that approximately 5o to 60 per cent of the total investment made by Foreign Institutional Investor (FII) aggregating to 67 billion dollar till early 2008, was through the PN route. 

What makes the PN route absolutely sinister is that the identities of these investors are kept secret. 

Neither the market regulator Securities and Exchange Board of India (SEBI) nor the Reserve Bank of India knows about them. The RBI has repeatedly called upon the government to ban PNs as the nature of the beneficial ownership or the identity of the investor is unknown. 

Further, RBI apprehended that trading of these PNs could lead to multi-layering, which will make it difficult to identify the ultimate holder of PNs. 

What is worrying RBI is that some of the money coming into the stock market via PNs could be the unaccounted wealth of some rich Indians which was taken out first through the hawala route and then brought into India through as PNs. 

Strangely, unlike the stringent Know Your Customer (KYC) norm applicable to domestic investors, the KYC norms for PNs are absolutely lax. This makes PNs a potent tool in the hands of Indians who have stashed money abroad and have routed it back into the Indian stock markets. 

The RBI fears narco-terror money finding its way into the Indian stock market through the PN route. 

When the National Security Agency (NSA), M K Narayanan, expressed apprehensions on how terrorists penetrated Indian stock markets and manipulated them a couple of years back, he was obviously referring to the PNs. 

Simultaneously, the market regulator SEBI has sought to seek information from several FIIs who had issued PNs to their clients.   However, SEBI has repeatedly failed as FIIs have consistently cited client confidentiality agreements to stall investigations on the matter. And strangely courts in India too seem to view that SEBI does not have the necessary legal teeth to probe further on this matter. 

Surely, a portion of Swiss money has found its way back into India. 

One way of dealing with the issue is to nationalise PNs (by expropriating them) now and here. Of course we can release the PNs belonging to other nationals and genuine foreign investors. 

That gives a choice to the Congress. 

They can endlessly debate the amount of money lying in secret bank accounts abroad. They can surely doubt the authenticity of the source of any information on this subject. They can repeatedly question what the National Democratic Alliance did when it was in power. They can wait for the G20 to take action. 

Nevertheless, spelling out the plan of action to tackle PNs is the ultimate yet simple and powerful test for the Congress to demonstrate its commitment to tackle corruption and the convoluted issue of Swiss money.

http://www.merinews.com/shareArticle.do?detail=Print&articleID=15791151 

Rs800 crore in Swiss accounts of Koda aides, say officials

DNAMonday, November 23, 2009 3:55 IST

The enforcement directorate (ED), which had sent a special team to Switzerland, has found bank accounts registered in the names of Koda's associates, including some local politicians, bureaucrats and key middlemen, sources close to the investigations said. But none of the accounts is in Koda's name.

Till now, these accounts and their size was a matter of speculation. The ED team has found that the money was parked in eight to nine such accounts, the sources said.

Switzerland is not the only country that has seen quiet visits from Indian probe agencies after the scam was unearthed.

ED teams have gathered crucial evidence from other tax havens, including the Bahamas and the Cayman islands. A special team has also been despatched to the north African country of Liberia, where Koda is alleged to have purchased mines worth $17 lakh.

http://www.dnaindia.com/india/report_rs800-crore-in-swiss-accounts-of-koda-aides-say-officials_1315208

New Delhi: Nearly Rs800 crore of Indian taxpayers' money, allegedly plundered by former Jharkhand chief minister Madhu Koda and company, is believed to have found its way to accounts in Swiss banks.http://www.dnaindia.com/india/report_rs800-crore-in-swiss-accounts-of-koda-aides-say-officials_1315208 

Koda a 'mask' for UPA allies: Nitish Kumar

PTI, Dec 13, 2009, 09.21pm IST

GARWAH (Jharkhand): Former Jharkhand Chief Minister Madhu Koda was just a 'mask' of the UPA allies, which 'tasted honey' for 23 months, Bihar Chief Minister Nitish Kumar said. 

"The Congress, the RJD and the JMM had used Koda as a mask, to loot the state during the 23 months of governance by the Independent MLA. They tasted madhu (honey) and left Koda to face koda (whip)," charged Kumar during an election meeting here in support of NDA candidates. 

"Don't vote for Independent MLAs, vote for NDA which can shape Jharkhand on the model of Bihar," he urged voters. 

"When Jharkhand was created, the people were enthusiastic, but the people of Bihar were depressed. But now it is just reverse. The people of Bihar are witnessing the state's prosperity while Jharkhand's dreams have been shattered," he claimed. 

Kumar accused the Congress-led UPA of being responsible for Jharkhand's perilous situation.

http://timesofindia.indiatimes.com/india/Koda-a-mask-for-UPA-allies-Nitish-Kumar/articleshow/5333886.cms 

Koda crores laundered at SEZ?

Pradeep Thakur, TNN, Jan 9, 2010, 03.30am IST

NEW DELHI: At a time when exports had hit a slump and many businesses had folded up, there were a few shining exceptions. One SEZ thrived in times of crisis. It is only now that the Enforcement Directorate has found that the balance sheets did not tell the real story. Investigation into the ‘Great Jharkhand Loot’, allegedly involving former CM Madhu Koda, has revealed a bigger scam at the Noida Special Economic Zone (NSEZ) concerning fictitious trade in gold and diamonds besides a land swindle. The scale of the scam runs into several thousand crores. 

Sources said the SEZ in question had a turnover of around Rs 16,000 crore last year of which more than 62% of the trade, nearly Rs 10,000 crore, was in gold, platinum and diamonds, most of which had allegedly been imported from Dubai and re-exported to the same destination. 

Investigators probing the case believe most of these dealings were done on paper only to facilitate banking transactions to launder money to Dubai and from there to a third country. The companies allegedly involved in the scam, which have now been barred from operating in bullion trade from the SEZ on suspicion of money laundering, allegedly belong to Sanjay Choudhary and other Koda aides and their business partner Manoj Punamia. 

The three firms — Balaji Universal Trade Link, Balaji Bullion and Balaji Universal Trade Link Manufacturing — had been operating out of the SEZ and had traded in gold and diamonds worth nearly Rs 100 crore in the last one-and-a-half years of its existence in the SEZ, sources said. 

The probe agency has also been trying to ascertain how Punamia was able to purchase a plot in SEZ despite a huge queue of exporters. This has brought the NSEZ authorities and Customs officials under the scanner of investigative agencies. 

Development commissioner S C Panda of the SEZ, when contacted, refused to come on line. Punamia, however, told TOI over phone from Mumbai that he was not involved in any illegal trade and had bought the SEZ plot for genuine export. He claimed that he was being framed. 

A plot in the export zone can only be allotted by the SEZ authority on a sub-lease of Rs 61/sqm to an exporter following due diligence process. In case the original property is pre-owned and has a building, the new allottee has to pay for the structure. Customs officials posted in the zone are tasked to ensure that a unit is genuinely involved in export-import business and value addition (manufacturing) is being made at the SEZ. 

However, sources said at least 30-40 plots within the SEZ were sold by original allottees in connivance with officials with the help of property dealers freely operating from nearby areas quoting a price tag of Rs 10,000 to 15,000 per sqm. Noida SEZ has a land-mass of 400 acres. 

The investigation has revealed that another firm which is under the scanner had traded in bullion and other metals worth Rs 5,500 crore in a year and re-exported them without adding any value.

http://timesofindia.indiatimes.com/india/Koda-crores-laundered-at-SEZ/articleshow/5425994.cms

ED to send letter rogatory to six countries in Koda case

TNN, Dec 11, 2009, 02.04am IST

NEW DELHI: As the Jharkhand assembly election comes to a close, the noose around former chief minister Madhu Koda and his former cabinet colleagues seems to be tightening. Enforcement Directorate (ED) on Thursday procured letter rogatory (LR) from a court here to be sent to six countries, seeking to debar any transactions relating to the accused or any of their entities in their jurisdiction. 

A month-and-a-half after ED booked Koda and his associates under Prevention of Money Laundering Act (PMLA), a Delhi court issued LRs for Switzerland, Indonesia, Thailand, Liberia, Sweden and UAE. The LRs would be sent to these countries through the ministry of external affairs seeking to debar entities mentioned in the PMLA case from entering into any transaction. 

Sources said ED authorities ha already spoken to some financial institutions in the countries for which LRs have been issued and had asked them to seize money allegedly belonging to the accused. 

Officials of both Income Tax and ED are currently verifying various records seized during the raids to unveil the trail of money laundering made by the cartel. Sleuths have taken out the password and account details of the Swiss bank allegedly operated by Koda's aides. 

While Koda was arrested in the middle of polls in the state, two of his close aides, Binod Sinha and Sanjay Choudhary, are absconding and have not yet surrendered despite an arrest warrant issued against them. Binod Sinha alone had been running an empire worth more than Rs 200-400 crore, according to ED's preliminary findings. 

Sanjay Choudhary, like Sinha, was one of the directors in the Balaji Bullion group of companies operating out of Mumbai's Zaveri Bazar and was behind investments worth thousands of crores abroad. Another accused who was a director with Sinha and Choudhary in the companies allegedly behind the money laundering, Manoj Punamia, has also refused to appear before ED despite repeated summons. 

http://timesofindia.indiatimes.com/india/ED-to-send-letter-rogatory-to-six-countries-in-Koda-case/articleshow/5323960.cms

Shouldn't the recovery of looted wealth be a matter of concern for RBI?

kalyan

I-T officer is off Koda probe just before hitting paydirt

Pradeep Thakur & Sonali Das, TNN, Feb 21, 2010, 12.44am IST

NEW DELHI/RANCHI: Ujjawal Chaudhary, senior Income Tax (I-T) officer, who led the probe into the multi-crore Madhu Koda scam, may have been on the verge of unravelling the link between politicians and hawala traders when he was abruptly shifted this week. 

Sources said the team led by Chaudhary, who has been taken off the Koda probe and moved to the assessment wing, had gathered strong evidence linking politicians and others to hawala operators engaged in laundering black money abroad. Chaudhary was transferred when raids were still continuing at Chaibasa in Jharkhand. 

The official and his colleagues are learnt to have hit a `jackpot' during their raids on Pune-based businessman Ajay Bafna, who was under surveillance since October last year when the first indication of his dealings with Sanjay Chaudhary, close associate of the former Jharkhand chief minister Madhu Koda, surfaced. 

The team struck gold also while raiding two hawala traders in Delhi. The search of the business premises of one Vipin Kapoor, a hawala operator based in Karol Bagh, yielded details of accounts of banks in Switzerland and other countries which seem to belong to politicians. 

Kapoor is a familiar face for tax authorities, having been convicted for gold smuggling earlier. But evidence seized from him surprised the raiding team given the likely connections with influential accounts. 

Within Jharkhand, raids by I-T personnel led by Chaudhary over three days beginning February 16, reveaked disclosures of hundreds of crores in concealed incomes of bureaucrats and businessmen. Those targeted included Manohar Lal Pal, personal aide to current Jharkhand chief minister Shibu Soren. 

A former employee of Coal India Limited who was sacked for allegedly forging his educational qualifications, Pal, faced with evidence, declared assets and investments totalling up to Rs 65 crore. Similarly, two businessmen engaged in mining -- much of it allegedly illegal -- have also admitted to having concealed Rs 30 crore from the tax authorities. A similar admission from a Kolkata-based chartered accountant, accused of helping the scamsters fudge accounts and who was confronted with papers showing he had not declared income worth Rs 12 crore, had appeared to be on the cards when Chaudhary was called off. 

The findings of the investigation have generated a sensation in Jharkhand and other places like Delhi and Mumbai as slueths unearthed sordid details of the brazen loot of public money. Those who are facing charges include officials as well as engineers working in the mining and electricity departments. 

In one particular instance, the team stumbled upon payment of Rs 4.6 crore allegedly made by cheque to functionaries of the Koda administration by an Andhra Pradesh-based construction company. In return, the company was allegedly allowed to inflate the cost of the project it was assigned under the Rajiv Gandhi Gramin Vidyutikaran Yojana. 

The explanation offered by the tax authorities makes Chaudhary's transfer seem innocuous. "He will be based in Patna and his jurisdictions will include both Bihar and Jharkhand. He has just been shifted to the assessment wing because he is best placed to assess the value of whatever the accused in the Koda scam and others have been found to possess," it was said. 

This does not wash with many because officers are seldom transferred mid-way through an investigation. Chaudhary, having spent just seven months at the last station, was not due for a transfer either. He took charge of the investigation on July 14, 2009. 

What is puzzling political circles is that the I-T's investigation is all against politicians who, with the exception of NCP's Kamlesh Singh, former colleague of Koda, are not part of the UPA. In fact, many in Congress would be relishing the discomfiture of Shibu Soren over the raid on Pal, considering that he preferred the BJP for an alliance. 

Chaudhary's transfer has been taken to the judiciary, with a group of lawyers seeking the intervention of the Jharkhand High Court which is hearing the PIL against Koda. 

But members of his team remain wary of more transfers. It is learnt that even during the course of investigation, Chaudhary and his team mates did not get enough cooperation while probing business dealings of Koda and his associates in Mumbai and elsewhere.

 

http://timesofindia.indiatimes.com/india/I-T-officer-is-off-Koda-probe-just-before-hitting-paydirt/articleshow/5597356.cms

Feb 8, 2010 - 12:08

Numbered accounts profit from bank crisis

A bank vault - shrouded in secrecy (Marcel Zürcher)

 

The fabled numbered Swiss bank account is shrouded in mystery – a mystery scarcely less deep than that surrounding their holders' identity.

 

Bankers shut up like clams at the mere mention of these accounts, as swissinfo.ch discovered. Questions about how many there might be, or what kind of person opens one, get short shrift in Geneva, Zurich or Lugano.

 

In the public imagination they are associated with spies, scandals and slush funds – quite undeservedly so, according to bankers.

“These accounts are subject to exactly the same duty of diligence as any other banking relationship,” UBS spokesman Dominique Gerster told swissinfo.ch. 

“We are obliged to know the origin of the funds and the identity of the beneficiary. If we receive a legal request, we can supply the authorities with information, just as we can for any other account,” he said.

“We always know the identity of our clients, whether the account is a numbered one or not,” said Jan Vonder Mühll, head of media relations at private bank Julius Bär in Zurich. But more he would not say. 

If a numbered account does not provide total anonymity, the fact remains that all documents containing the client’s name and address are placed in a safe and only a very limited number of authorised bank officials have access to it. 

“A colleague from another branch of our bank couldn’t discover the identity of a client who has an account with us,” an asset manager at the Ticino branch of a cooperative bank told swissinfo.ch.

In contrast to other kinds of accounts, there is no database matching the name of the holder and the account number. “This gives extra protection to the client’s privacy,” he explained.


Last bastion of liberty

Even if the accounts are not – quite – as secret as the public likes to imagine, they are evidently still attractive to some.

“This is one of the last areas where there is still a little bit of freedom in the face of increasing regulation of banking activities,” said Chantal Bourquin, head of communication for the Association of Swiss Private Bankers (ASPB). “That explains why financial institutions are still keen to be discreet.” 

James Nason, spokesman for the Swiss Bankers Association in Basel, laughed off the mysterious reputation of such accounts – after all, all accounts have numbers, he joked. But he was no more ready to spill the beans than any of the banks when it came to specific questions.

Increasing demand

Even if no one was prepared to give facts and figures, it seems that these accounts are more popular than ever, thanks to recent cases where whistleblowers have revealed the names of suspected foreign tax evaders to their home governments.

“Foreigners are now going for numbered accounts as a precaution, although this kind of banking was already highly valued by wealthy clients in the past,” said the Ticino asset manager, whose bank has benefitted from the flight of funds which weakened some of the major banks.

“There’s no doubt that given the attacks by the Italian government in particular, or to ensure that their details do not fall into the hands of some untrustworthy bank employee, our customers are becoming more and more demanding as far as confidentiality is concerned. And there is nothing better than a numbered account to respond to their expectations,” he explained.

Representatives of the other big banks approached by swissinfo.ch would neither confirm nor deny these remarks. Nason did admit that there could be a trend in this direction but did not say whether the members of his association were already benefitting.


Who needs anonymity?

It is not only for tax reasons that a numbered account can be attractive. In cases of divorce, inheritance or even blackmail it gives the holder additional protection. If there is a court case, the plaintiff has to name the bank where he believes the funds in question are held before proceedings can go ahead. 

And that is a major advantage for potential victims of blackmail, such as politicians or celebrities. 

Most bank orders pass through several hands within a bank and any bank slip normally includes the client’s name and address, but a numbered account avoids these risks.

It’s a protection which comes at a price, as Nason explained: the administrative procedures are more complicated, and as a consequence the costs are higher. 

So most of us will never be any the wiser about them. 

Nicole della Pietra, swissinfo.ch (adapted from French by Julia Slater)

 

 NUMBERED ACCOUNTS

A numbered account can consist of a name, a number or a combination of both.

The beneficiary is not anonymous, but only a very limited number of people have access to the details. 

To meet strict confidentiality rules, certain precautions are obligatory:

Bank statements must be sent to a postbox, or to a legal representative of the account holder.

There is no cheque book, credit cards or other means of transferring funds: they leave too many traces.

Any payment into the account by a third party must be formally authorised. 

Bankers advise clients to avoid accessing their account over the internet, because of security concerns. 

The same applies to the telephone; clients are advised to use public call boxes.


SWISS BANKS AND SECRECY

Swiss banking secrecy has existed since 1934.

Switzerland is not the only country with numbered bank accounts. They are also available in such places as Austria, Luxembourg, Monaco and Lichtenstein. 

A number of websites offer advice to expatriates about opening an account in Switzerland. Some require minimum deposits of hundreds of thousands of francs.

Banks say clients should come to them directly if at all possible.


LINKS

·         Banking Secrecy Special (http://www.swissinfo.ch/eng/Specials/Swiss_banking_secrecy_under_fire/Index.html?cid=653772)

·         Swiss Financial Market Supervisory Authority (FINMA) (http://www.finma.ch/e/pages/default.aspx)

·         Swiss Private Bankers Association (SPBA) (http://www.swissprivatebankers.com/en)

·         Swiss Bankers Association (http://www.swissbanking.org/en/)

URL of this article

http://www.swissinfo.ch/eng/Specials/Swiss_banking_secrecy_under_fire/Background/Numbered_accounts_profit_from_bank_crisis.html?cid=8256858

 

 Swiss Bank Data Offered to Germany

 

Berlin Considers Paying for Stolen Information Detailing Alleged Tax Evasion, as Pressure Rises About Secret Accounts

 

By DAVID CRAWFORD in Berlin and DEBORAH BALL in Zurich, JANUARY 31, 2010

Wall Street Journal

Switzerland faced a renewed assault on its private banking system as Germany considered paying for secret Swiss account data detailing alleged tax evasion by about 1,500 German taxpayers.

German authorities familiar with the investigation said Sunday that a confidential informant offered to sell them the data for €2.5 million ($3.5 million). The authorities, who say the information was stolen from a Swiss bank, say officials examined samples of the data that proved to be authentic.

Swiss banking, built on the promise of confidentiality, is still reeling from a bruising battle last year with the U.S. over allegations regarding tax evasion by U.S. taxpayers. Many Swiss bankers worry that such cases will erode client trust and lead to a flight of accounts to other countries. Under pressure from the U.S. and other nations, Switzerland recently agreed to water down its banking secrecy laws. Yet tax evasion isn't a crime in Switzerland, and countries across Europe continue to complain that the Alpine nation is an attractive refuge for tax cheats.

A confrontation with Germany could represent the biggest challenge Switzerland has faced thus far. Though the Swiss clash with the U.S. drew much attention, Americans with offshore accounts in Switzerland represented no more than 5% of Switzerland's $1.8 trillion offshore-banking business, according to KPMG.

German officials say the country's taxpayers have about €175 billion in Swiss bank accounts, or more than 10% of the total. According to KPMG, as much as 80% of European Union account holders' money in Switzerland is undeclared, and experts say Germans are among the biggest groups of tax evaders in Switzerland.

Swiss officials reacted sharply to news of the latest data breach, cautioning Germany not to acquire what Switzerland considers stolen property.

"I consider it rather insidious that a state operating under the rule of law would make use of illegal data," Swiss President Doris Leuthard said Sunday on the sidelines of the World Economic Forum in Davos, Switzerland. "It's a development that we cannot accept."

The Swiss Bankers Association released a statement calling on Germany to return the data. "Should this indeed turn out to be a case of data theft, we expect the German government to...return the data to its owners and take criminal measures against the thief," it said.

Swiss finance-ministry spokesman Roland Meier said German officials haven't yet informed their Swiss counterparts about the offered data. Mr. Meier said Switzerland is concerned about possible violations of Swiss law, including theft of bank data. Referring to a possible criminal investigation, he added, "It is a problem when illegally obtained information is introduced." Switzerland expects Germany will ask Switzerland for legal assistance based on the information, Mr. Meier said.

A spokesman for the German finance ministry said that Germany has no set policy on when it is proper to pay a reward to a provider of evidence in tax-evasion cases, "Each case is decided on an individual basis," the spokesman said. He declined to comment on a specific case.

German politicians were divided over the weekend on whether to purchase the data.

Volker Wissing, a member of Germany's business-friendly Free Democratic Party and chairman of the German parliament's finance committee, said he supports the purchase if German officials conclude it wouldn't violate German law.

"The sale of stolen goods is a crime, but any legal means of obtaining important evidence should be considered with an open mind," said Mr. Wissing, adding that his finance committee will discuss the proposed sale at a hearing Feb. 10. German officials said the information could help them retrieve as much as €200 million in back taxes.

In an earlier case, German prosecutors used the information successfully to obtain convictions.

Other politicians were more skeptical."It would not be proper for the German government to purchase stolen property," said Michael Fuchs, deputy parliamentary party chairman and a member of Chancellor Angela Merkel's conservative Christian Democratic Union.

Mr. Fuchs said Germany should press Switzerland to provide evidence of tax fraud through the process of international legal assistance. He said he would ask German Finance Minister Wolfgang Schäuble to raise the issue of closer bilateral cooperation in tax investigation cases with his Swiss counterparts.

A spokesman for Germany's finance ministry said a decision on any new purchases of evidence would be made after state government officials conclude a preliminary investigation. The informant offered the data to tax authorities in the state of North-Rhine Westphalia, Germany's most populous state.

Germany has purchased stolen bank data for tax prosecutions in the past. In 2008, Germany's foreign intelligence service paid about €4.2 million to Heinrich Kieber, a former bank employee, to buy account files stolen from LGT Treuhand AG, a subsidiary of Liechtenstein's largest bank, LGT Group. An LGT spokesman and Liechtenstein banking officials say Liechtenstein-based LGT didn't violate Liechtenstein law.

The records, which included information on accounts held by about 600 Germans, led to the arrest in February 2008 ofKlaus Zumwinkel, then-chief executive of Deutsche Post AG, one of Germany's biggest companies.

A German court subsequently gave Mr. Zumwinkel a two-year suspended sentence and fined him €1 million on the tax-evasion charges.

Deutsche Post referred questions last year to Mr. Zumwinkel, who declined to comment. A spokesman for LGT said the bank has reorganized its client relationships to ensure they are in accord with the law.

The brewing clash with Germany comes at a delicate time for Switzerland, whose European neighbors have also been pressuring the Alpine nation to help them oust tax dodgers with secret Swiss bank accounts.The Swiss government was dealt a serious setback last month when a Swiss court partially unraveled a deal Bern struck last year with the U.S. to settle accusations that Swiss bank UBS AG helped Americans evade taxes. The court found the agreement with the U.S. to release the UBS account data can't break Switzerland's still valid double-taxation treaty with the U.S. The treaty calls for the release of bank data as part of legal assistance only in the case of tax fraud, which—unlike tax evasion—is illegal in Switzerland. The court determined that those accounts didn't constitute tax fraud. The Swiss are currently searching for a way to salvage the deal.

Over the last six months, Switzerland'sEuropean neighbors have also been piling pressure on the Alpine nation to help them oust tax dodgers with secret Swiss bank accounts.

Italy launched a tax amnesty that lured back about €80 billion in hidden money, much of it from Switzerland. At one point last fall, Italian authorities raided Swiss banks in Italy in what Swiss officials regarded as an effort to scare Italian tax dodgers.

Last fall, the French government received data on French account holders in Switzerland that had been stolen by an employee of HSBC Holdings PLC's Switzerland business, angering the Swiss government. Last week, Swiss and French officials agreed that France wouldn't use the stolen data to track down tax evaders. HSBC confirmed in December that data were stolen by a former employee in Switzerland and that it had filed a criminal complaint against the man.

http://online.wsj.com/article/SB10001424052748703762504575037463469612220.html?mod=WSJ_World_LEFTSecondNews#printMode

 

Black money: Notice to 50 Indians with LGT a/cs


13 May 2009, 0056 hrs IST, M Padmakshan, ET Bureau


MUMBAI: The government has made the first move to home in on individuals and entities who have stashed away black money in one of the offshore banks. 

The Central Board of Direct Taxes (CBDT) has sent notices to at least 50 individuals figuring among a list of Indians who hold accounts with the LGT Bank, Leichtenstein, a tax haven which borders Germany. 

“We have sent notices. Whatever action that can be taken under law would follow,” CBDT chairman SSN Moorthy told ET. The tax authorities have sought information on the source of the money lying in the overseas bank and whether the account holders have paid tax on the amounts. 

The list, provided by the German government, reportedly contain the names of some prominent Indian businessmen and industrialists. However, the Indian government is under obligation not to make the names public as they were provided under the Indo-German Double Taxation Avoidance Agreement (DTAA). 

The information exchanged under DTAA is confidential, but the government is free to act upon the information. In the run-up to the polls, the Congress has come under attack from the BJP for not doing enough to bring back the black money parked by several Indians in offshore destinations around the world. At a recent election rally prime minister Manmohan Singh has rubbished these allegations saying that the issue is nothing but a “election stunt”. 

According to international reports, wealth stashed away by Indians in offshore banks could be $1-1.5 trillion. Tax Justice Network, an organisation that works towards fair tax treatment, says the wealth concealed in tax havens across the world at between $11-12 trillion. Indian IT laws have provisions to prosecute a taxpayer who refuses to pay tax after a crystallised tax demand. 

A way to bring money to India 

If a person who holds accounts abroad is served a demand notice but declines to pay, (s)he could be invariably prosecuted under I-T laws. Legal experts opine that prosecution is an ideal tool to bring back unaccounted wealth held by citizens offshore. 

Mahesh Jethmalani, senior advocate, says the prospect of prosecution could be the most effective way of bringing such money back to India. 

The government, in an affidavit to a public interest litigation filed by noted jurist Ram Jethmalani and four others, told the Supreme Court that it has the names of Indians holding accounts in LGT Bank. 

However, tax experts and senior income-tax officials opine that there are roadblocks on the way to accessing accounts in LGT bank because of the limitation period that bars the I-T department to take up cases older than six years. Experts say the existing law on limitation needs to be altered. But to be effective, the law should be altered with retrospective effect.

 

http://economictimes.indiatimes.com/articleshow/4522426.cms?prtpage=1

 

Black money trail: Swiss ready to revise treaty
4 May 2009, 0329 hrs IST, TNN

NEW DELHI: The government has approached Swiss authorities to renegotiate its Double Taxation Avoidance Agreement (DTAA), a tax treaty between the two countries in force since 1995, to obtain details of bank accounts maintained by Indians in Switzerland. 

The Swiss government has in the past refused to share bank information pertaining to Indians with New Delhi on the ground that such details were not necessary for application of the DTAA. Swiss authorities had expressed inability to provide details, citing their own laws, since India's requests were related to enforcement of its internal tax laws. 

However, after the G-20 nations adopted a tough posture at their recently held London summit, seeking to bring tax havens and non-cooperating jurisdictions under close scrutiny, Swiss authorities expressed willingness to cooperate. 

Just before the London summit, the Swiss confederation had told the Organisation for Economic Cooperation and Development (OECD) -- a Paris-based group with 30 member countries including the US, UK and many European nations -- that it was ready to withdraw its earlier reservation on sharing information and renegotiate its tax treaty with other governments. 

But how effective the revised tax treaty will be is quite clear from a rider provided by the Centre in the affidavit it submitted before the Supreme Court on the subject last week. The affidavit said, ``Even as per the OECD standards, unless specific information about the depositors becomes available, fishing or roving enquiry is not permissible.'' 

India is part of the task force constituted by the G-20 at its London summit to formulate a ``global plan for recovery and reform which promises to take action against non-cooperative jurisdictions, including tax havens and also to deploy sanctions to protect public finances and financial systems''. 

On alleged role of Swiss banks in the 2004 stock market crash, the affidavit said that Securities and Exchange Board of India had in 2005 barred Swiss financial institution UBS Asia from issuing and renewing any participatory notes for a year. But this was following its refusal to disclose information relating to an investigation carried out by Sebi, not for its role in the market crash.

http://economictimes.indiatimes.com/articleshow/4480371.cms?prtpage=1

India has got black money details from Germany: Government
3 May 2009, 0400 hrs IST, IANS

 

NEW DELHI: Assuring the Supreme Court that it was trying to retrieve black money stashed in tax havens abroad, the government on Saturday said it 

 

has already secured significant information from Germany and income-tax sleuths were following it up. 

The finance ministry disclosed this in a 27-page affidavit to the apex court in response to a lawsuit accusing the government of doing precious little to retrieve Indian black money to the tune of Rs.70 trillion stashed abroad. 

In its affidavit, the government also told the court that its persistent efforts in collaboration with international community have also resulted in Switzerland agreeing to make its secretive banking laws and norms more transparent in tune with the global standards. 

Reiterating its assertion that it is not sitting idle in this matter, Director Priya V.K. Singh of the Department of Revenue under the finance ministry told the court that following repeated efforts since Feb 27 last year, the government got the information on Indians with secret accounts in LGT Bank of Liechtenstein March 18 this year. 
lso Read

  Black money stashed in foreign banks should be brought back

  Efforts on to retrieve Indian black money: Government

  Black money issue 'good election fodder: Swiss Bankers Assn

  Cong downplays, BJP inflates black money figures



The government, however, added in its affidavit that the information procured from Germany cannot be made public owing to the condition of strict confidentiality under which it was procured. 

"On account of persistent follow-up by the union government, the German government provided the information (about Indians' secret bank accounts) on March 18, 2009," said the affidavit. 

"The said information, however, was made available on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement," it added. 

"The information received from the German authorities has been forwarded to various taxation authorities concerned for action as appropriate under the provisions of the Income Tax, 1961 and the Wealth Tax Act, 1957," it said. 

It added "the tax authorities have initiated the process of reopening the assessments (of those tax evaders) under the Income Tax Act, 1961 and Wealth Tax Act, 1957".

http://economictimes.indiatimes.com/articleshow/4476263.cms?prtpage=1

 

Government delayed affidavit on black money abroad: KPS Gill 
6 May 2009, 1949 hrs IST, IANS

 

CHANDIGARH: Former Punjab director general of police KPS Gill on Wednesday accused the central government of causing an inordinate delay in 

 

filing an affidavit in the Supreme Court about the action taken to bring back the black money stashed in foreign banks.


"We had filed a PIL (public interest litigation) in the Supreme Court of India, seeking urgent measures to bring back the black money to India last month. However, the government took a long time to file an affidavit, and did not honour their commitment to file it in 48 hours," Gill told reporters at a press conference here. 

The petition was filed by Gill and five others, including former law minister Ram Jethmalani, April 22 and the government submitted its affidavit May 3. 

"In fact, we are not satisfied with this affidavit as they have mentioned only about Pune-based businessman Hasan Ali Khan and also not mentioned the complete facts about his money laundering activities. The government is afraid of disclosing the other names," said Gill. 

"This black money is estimated (to be) worth Rs.70 lakh crore (Rs.70 trillion) that was siphoned out of India in the accounts of foreign banks. We have come to know about this figure from newspapers and magazines reports," he said. 

A huge portion of this money was deposited in undisclosed accounts of the UBS Bank at Zurich in Switzerland, outside the jurisdiction of India, Gill pointed out. 

About their petition, he said: "The main aim of our petition in the Supreme Court is to track the progress made in the case of black money that is hoarded illegally in foreign banks. This is an important issue and so far development in the case is not at all satisfactory." 

"We want to pressurise all the political parties to take up this issue seriously without involving politics into it. We want to bring that money back to India through the intervention of the Supreme Court and the government should spend it in the right channel." 

The Supreme Court on Monday censured the union government for its failure to prosecute Pune businessman Hasan Ali Khan under the Money Laundering Act for stashing a huge sum of black money in UBS Bank in Switzerland. 

http://economictimes.indiatimes.com/articleshow/4492289.cms 

UPA hides info from Supreme Court

'Indian documents in black money case forged' 

By IANS  

11 May 2009 10:25:07 PM IST

 

NEW DELHI: In a major embarrassment for the Indian government, the Swiss Justice Department on Monday said it had received forged documents from New Delhi two years ago in connection with an alleged Rs.40,000 crore ($8 billion) money laundering case involving racehorse breeder Hassan Ali.

"The documents submitted are forged," Folco Galli, a spokesperson for the Swiss government, told a private Indian TV channel on Monday. He said the Indian government was dragging its feet on the issue of retrieving black money believed to be stashed away in foreign banks.

The official said the Indian government had submitted forged documents to the Swiss authorities in January 2007 in the $8 billion Hassan Ali money laundering case. Pune-based stud farm owner Ali is alleged to have illegally transferred the money to Swiss bank accounts and had come on the Enforcement Directorate's radar.

Galli also claimed the Swiss government submitted certain queries to its Indian counterpart in April 2007 but had not received a reply even 24 months later.

"India makes only few requests per year to Switzerland for legal aid in tracking down black money," he said.

The black money issue has become a major campaign topic in the Lok Sabha polls, with the Bharatiya Janata Party promising that if voted to power it would bring back the billions of rupees stashed away abroad. The United Progressive Alliance government has claimed in the Supreme Court that it has been doing what it can to bring back the black money.

http://tinyurl.com/q8uqjj

Lectures of Vaidyanathan and Venkatesh on illegal funds in tax havens

 Vaidyanathan, IIM Bangalore - specch on Illegal funds of Indians abroad - Tax Havens 


Vaidyanathan Part1
http://www.youtube.com/watch?v=cYkQo8JI5PA

Vaidyanathan Part2
http://www.youtube.com/watch?v=xByB2WReiIA

Vaidyanathan Part3
http://www.youtube.com/watch?v=tql7VR2uqm8

Vaidyanathan Part4
http://www.youtube.com/watch?v=m3v0zYyc8xc

M.R. Venkatesh speech on Illegal Funds of Indians Abroad - Participatory Notes


MRV Part1
http://www.youtube.com/watch?v=ZXosZOomPS8

MRV Part2
http://www.youtube.com/watch?v=x8in2zR16jc

MRV Part3
http://www.youtube.com/watch?v=C1HS9KFLNA4

MRV Part4
http://www.youtube.com/watch?v=hWROGfYp-8M

     

These lectures on Tax Havens and Illegal Funds of India”  by   Dr. R. Vaidyanathan, Professor, Indian Institute of Management,  Bangalore  & MR Venkatesh, Chartered Accountant were organized by

Swadeshi Jagaran Manch, Chennai, Indian Liberal Group ( ILG),Rajaji Centre for Public Affairs and Institute of Economic Education(IEE on  Friday,  May 1, 2009, at  5:30 PM at  Dakshinamurthy Auditorium . S. High School, 218 R.K. Mutt  Road, Mylapore, Chennai 600 004  


Public loot in tax havens: 26/11, Priyamvada Birla’s brother Tapuria, stud-farm owner Hassan Ali, counsel Nalini Chidambaram

 

Counsel files application

Kolkata, Dec. 19, 2008

Nalini Chidambaram, Counsel for Kashi Nath Tapuria, on Friday filed a petition before Justice K.J. Sengupta of Calcutta High Court to be added as a party in the probate proceedings of the will of the late Priyambada Birla, wife of the late M.P. Birla. The petition stated that Mr. Tapuria was the executor of the 1982 will of Priyambada Birla and also her brother. The application was supported by the Birlas, but Counsel for the Lodhas asked for filing opposition. The exchang e of affidavits will be completed probably by January 15 and the matter will appear on the first available Friday after completion of the exercise. —

Our Legal Correspondent

http://www.thehindubusinessline.com/2008/12/20/stories/2008122052210500.htm

 

Priyamvada Birla will: Tapuria, Khaitan move HC to become parties to suit

Our Legal Correspondent

Kolkata , July 4

MR KASHI NATH TAPURIA and Mr Pradip Khaitan on Monday filed a petition in the High Court asking to be added as party to the Testamentory suit for grant of probate of the will of Priyamvada Birla, made in 1999. The probate application was filed by Mr R.S. Lodha.

In the petition, it was stated that the petitioners were appointed executors in the mutual will of Priyamvada Birla, made in 1982. Mr Justice K.J. Sengupta in his order dated March 11, had held that G.P. Birla has caveatable interest in the will of Priyamvada Birla because he is one of the executors of the said mutual will. By virtue of the said order, the present petitioners do have unquestionable caveatable interest in the will of Priyamvada Birla, made in 1999.

The petitioners wanted to file a caveat in the proceeding but the court refused to accept this as the probate proceeding has been transferred out as Testamentory suit. Under these circumstances, the petitioners filed the petition, which is likely to appear for hearing on Tuesday.

http://www.thehindubusinessline.com/bline/2005/07/05/stories/2005070502990300.htm

 

Birlas file probate for 'mutual' will

 

Our Bureau / Kolkata August 18, 2004

 

 

 

 

New turn to Birla-Lodha battle.

 

The Birla-Lodha battle took a new turn today with the Birla family filing an application for probate of "mutual" wills made by late M P Birla and Priyamvada Birla in 1982.

 

The two wills, dated July 13, 1982 by M P Birla and Priyamvada Birla essentially bequeaths each other absolutely all properties upon death and the executors of the will, who would have the authority to make over, donate or settle for charitable purposes.

 

N G Khaitan, legal advisor to the Birla family said that the two wills were mutual and concurrent.

 

The executors of mutual 1982 will of late M P Birla were Priyamvada Birla, K K Birla, Pradip Khaitan (of Khaitan & Co), Kashinath Tapuriah (brother of Priyamvada Birla). N G Khaitan circulated a similar will made by M P Birla but dated May 10, 1981. The executors in this will were Priyamvada Birla, K K Birla and Kashinath Tapuriah.

 

The executors of Priyamvada Birla's will dated July 13, 1982 were M P Birla, G P Birla and Kashinath Tapuriah.

 

With this application, there are three application for probate of the estate of M P Birla and Priyamvada Birla, two mutual wills dated July 13, 1982 by M P Birla and Priyamvada Birla and another application for will made by Priyamvada Birla in 1999, filed by R S Lodha.

 

Khaitan said, "We have filed a suit in the Calcutta High Court where I have taken a stand that R S Lodha is neither a rightful executor nor a lawful executor and his inter-meddling with the estate of M P Birla is unlawful. He should hand over the entire estate to the executors of the mutual will".

 

Khaitan added that the will being "mutua" was irrevocable.He also pointed out that Lodha's probate application puts a value of Rs 3.52 crore to the estate of M P Birla, but according to the Birla family it was to the tune of Rs 2,404 crore.

 

This valuation by the Birla family pertained only to Priyamvada Birla's shareholding in various companies. Taking the charitable trusts into consideration, the total value of the assets would be in the region of Rs 5,000 crore, said Khaitan.

 

However, the "mutual" wills of 1982 by M P Birla and Priyamvada Birla were not registered wills unlike the will made by late Priyamvada Birla in 1999, bequeathing all assets to R S Lodha.

 

Khaitan said that registration was not necessary for will but probate was an absolute must.

 

Khaitan said, both sisters of M P Birla--Lakshmi Newar and Radha Mohta--had filed affidavits stating they had no objection to the grant of probate to the executors of the 1982 will.

 

The sisters had filed affidavits objecting to the application for probate of the will made by Priyamvada Birla in 1999.


 

Kashinath Tapuriah, brother of late Priyamvada Devi Birla, thought that Priyamvada 'must have been misled' to carry out the Will of 1999 which said R S Lodha would be the beneficiary of the M P Birla estate.

 

Speaking to Business Standard Tapuriah said: "She was very much aware of the mutual and concurrent will made in 1982. She could not have acted differently thereafter. Thus, I assume she must have been misled."

 

Tapuriah pointed out that either his sister was made to think that 'the estate will go to a trust' or the it was 'camouflaged in some manner' as 'she had implicit trust' in Lodha.

 

The other reason for being mislead could be that Priyamvada Devi was not well versed with the legal intricacies.

 

Pointing that she was very devoted to her husband, Tapuriah noted: "I cannot believe that she could revoke the joint commitment made in 1982. They arrived at the decision of making a mutual and concurrent will after a prolonged illness during 1979-81. Their sole intention was that to do something which must benefit the community at large."

 

http://www.business-standard.com/india/news/birlas-file-probate-for-\mutual\-will/189767/

 

CA in India.org e-bible for chartered accountants

January, 12th 2009

The Mumbai income-tax department has issued notices to Pune-based real estate consultant Hassan Ali Khan, the main accused in a case involving alleged money laundering to the tune of $8 billion (Rs39,120 crore), and two others for suspected tax evasion, a senior income-tax official said.

A show-cause notice—a request for information, backed by a legal threat—issued by the department on 31 December has raised a demand of Rs40,000 crore against Khan for not disclosing funds in several foreignbank accounts, including $8 billion in an account in UBS AG, Zurich, said the official, who didn’t want to be named.

Separately, the department raised a demand of Rs580 crore against Kashinath Tapuriah, a Kolkata-based businessman and alleged accomplice of Khan, and Rs20,000 crore against his wife Chandrika Tapuriah, the official said.

“We have issued notices to Khan, Kashinath Tapuriah and Chandrika Tapuriah for tax evasion as they have not replied to the queries raised by us on the documents seized during the investigation,” the official said. “We have not received any communication from them on the matter since 2007.” The official declined to give details of the alleged tax evasion. A senior official at the Enforcement Directorate (ED), which has charged Khan with violating foreign exchange laws by holding $8 billion abroad, said Chandrika Tapuriah has an account at Credit Suisse and between 2001 and 2005, two transactions worth $1.6 billion were made through it.

“Being an Indian citizen, she should have declared these transactions,” said the ED official. He declined to be named as the case has been looked into by the income-tax department.

Khan, who also owns racehorses, declined to comment on the income-tax notice. Tapuriah said in a text message from Kolkata, “I have not been well and doctors have advised me not to take any tension or strain—physical or mental. As such, I am unable to talk.” He said he would get in touch with Mint when he gets better.

The trio has 30 days to reply to the income-tax notice.
Under income-tax law, if the department finds any incriminating document against a taxpayer, the onus lies with the taxpayer to prove his or her innocence. “Khan and others (Tapuriah and his wife) can appeal against the notice before the income-tax commissioner of appeals,” said the income-tax official. At the next stage, they can even move the income-tax appellate tribunal.

In January 2007, the income-tax department had first raided Khan’s residence at Koregaon Park in Pune and seized documents that revealed his $8.04 billion UBS account in Zurich. The department found that Khan concealed his income and had not filed income-tax returns since 1999. The department also raided his properties in Mumbai and Hyderabad.

Later, ED started investigating the case as the department suspected money laundering. ED has also been probing Khan and Tapuriah for violating the Foreign Exchange Management Act, or Fema, and laws against money laundering. On 29 December, K.N. Rao, special director of ED, issued a show-cause notice to Khan for the violation of Fema by holding $8 billion in his UBS account.

Mint reported on 10 January that ED, which investigates violations of the country’s foreign exchange laws, is preparing to issue another showcause notice to Khan, his alleged accomplice Philip Anandraj, a Switzerland-based hotelier, and Tapuriah. The ED investigation report claims Khan had $8.04 billion in his UBS account as on 8 December 2006.

The report quotes a letter by M. Rohner, a wealth management executive at UBS, in 2006 that said: “Khan can withdraw $6 billion and was free to invest this amount as and when he chooses to do so and that the balance amount of $2.04 billion would remain bound with UBS until 15 January 2007 and after which Khan was free to invest the same as and when he chooses to do so.”

ED’s findings have disclosed Khan’s plan to finance a $500 million project of Saudi arms dealer Adnan Khashoggi in a notarized document signed by him on 29 June 2003 in London. However, the report is silent on the nature of the Khashoggi venture in which Khan was expected to invest or, indeed, how he met the Saudi arms dealer.

Khan has been appearing before ED every alternate day after a Mumbai court granted him bail on 2 January in a fake passport case.

http://www.cainindia.org/news/1_2009/rs40000_crore_incometax_notice_served_on_hassan_ali_khan.html

 

Kolkata bizman is alleged co-conspirator in Rs 71,000-cr tax evasion case

2009-05-06 10:38:03

Pune: Kolkata-based businessman Kashinath Tapuriah, who has been named by the Union Government as an alleged co-conspirator in a case that involves stashing away of nearly Rs 1,20,000 crore in overseas banks, is the brother of the late Priyamvada Devi Birla, who once headed the MP Birla group of industries.

He is also the co-executor of the mutual will of Priyamvada Birla made in July 1982 which became embroiled in legal issues soon after her death in July 2004. On March 26, 2009, Tapuriah moved an application in the Calcutta High Court seeking the appointment of a Supreme Court judge as administrator for the Rs 5,000-crore estate of the M P Birla Group.

More India business stories

An affidavit filed in the Supreme Court on May 2 on behalf of the Union Government in response to a Public Interest Litigation on black money described Tapuriah (which it spelt without the %u2018h") as "the alleged co-conspirator" with Pune-based racehorse owner, Hasan Ali Khan, "in relation to alleged illicit deposits made by them in UBS Bank."

It added that "pursuant to the search, certain documents relating to UBS Bank were found which revealed that Ali Khan had access to sizeable amounts in the UBS Bank, and from the possession of Tapuriah, documents revealing instruction notes issued by Ali Khan in December, 2006 from London to UBS Bank, directing transfer of funds from his account in the bank."

On the basis of seized documents and material gathered during investigations, the Income Tax Department has raised a total tax demand of Rs 71,848.59 crore against Hasan Ali Khan, his wife, Rheema Khan and other associates. According to an income tax official, in case of search operations, the department raises a demand of 60 per cent of the assessed income. This puts the assessed income in this case at around Rs 1,20,000 crore.

Tapuriah shot into the limelight in the late 1980s when he acquired Indian Cables (subsequently named Incab Industries) from the erstwhile British owners. However, in 1993, he stepped down as chairman.

Asked by Business Line on Monday about when he last met up with Ali Khan, Tapuriah said: "I haven't met him for over a year now." He also denied having knowledge of the affidavit and of his being named a co-conspirator, adding, "I don't know what the conspiracy is."

The affidavit filed by the Government, however, stated that Mr and Mrs Tapuriah were questioned thrice in February this year. "The investigation carried out till date, in respect of both, Kashinath Tapuria and his wife, Tapuria reveals existence of certain overseas bank accounts," it said. "The Government is in the process of obtaining details of the said accounts. The passports of Mr and Mrs Tapuria are under the possession of Enforcement Directorate."

More India business stories

According to a regular punter in Pune, Ali Khan owns a handful of horses, and another 20-25 horses in partnership with others, and was ready to pay Rs 8 crore in income tax for the 2008-09 assessment year. According to the investigation report by Senior Inspector Bhanupratap Barge in March 2007, he completed his Std XII from Hyderabad where his father was a superintendent in the excise department. Ali Khan engaged in a variety of businesses, including a car rental service and a Dubai-based scrap business.

http://sify.com/finance/fullstory.php?a=jfgkBWgbjde&title=Kolkata_bizman_is_alleged_co_conspirator_in_Rs_71_000_cr_tax_evasion_case

 

  • Posted: Sat, Jan 10 2009. 12:59 AM IST

Lid off Pandora’s box in Hassan case

ED’s findings have disclosed Khan’s plan to finance a $500 million project of Khashoggi in a notarized document signed by him on 29 June 2003 in London

Khushboo Narayan

Mumbai: Transactions running into hundreds of millions of dollars, more links with Saudi arms dealer Adnan Khashoggi, a close friendship with well-connected Kolkata businessman Kashinath Tapuriah, and at least a passing acquaintance with two politicians.

These are just some of the findings of an ongoing investigation by India’s Enforcement Directorate (ED) into Pune-based real estate consultant Hassan Ali Khan, who has been charged with violating Indian foreign exchange laws by holding $8 billion (nearly Rs39,000 crore) in an account in UBS AG, Zurich. ED, which began the investigation in 2007, suspects the money has been laundered.

Also See Khan’s Fast Lane (Graphic)

Based on the findings, ED— that investigates violations of the country’s foreign exchange laws—is preparing to issue another so-called show cause notice (basically a request for information, backed by a legal threat) to Khan, his alleged accomplice Philip Anandraj, a Switzerland-based hotelier, and Tapuriah.

“We will serve him (Khan) and his associates another show cause notice under Fema (India’s Foreign Exchange Management Act) within two months. However, investigations under money laundering case may take six months before we arrive at a conclusion,” said A.K. Singh, assistant director of ED, who led the investigation.

On 29 December, K.N. Rao, special director of ED, had issued a show cause notice to Khan for the violation of Fema by holding $8 billion in his UBS account in Zurich.

Also Read Swiss hotelier distances himself from stud-farm owner on the run

Swiss hotelier wins 1st round in $8 bn money laundering case

ED gets stay from Bombay HC on returning Anandraj’s passport

RBI recalls UBS banking licence

Singh claimed UBS may not be the only bank where Khan has stashed his money and that there could be three other foreign banks where he has done so. “ED is in the process of gathering information on his (Khan) bank accounts with Credit Suisse, Credit Lyonnais and Bank Sarasin in Switzerland.”

Singh’s investigation report, which has been reviewed by Mint, reads like a crime thriller. It refers to bank transactions across continents, and to efforts by Khan, whom it describes as a scrap dealer from Hyderabad who called himself “Nawab” and claimed to be the great grandson of the Diwan (prime minister) of the Nizam of Hyderabad, to buy a luxury hotel in Switzerland, and his dealings with Khashoggi.

Khan, who also owns a few race horses, declined comment. His wife, Reema Khan, said, “The investigation is on and my husband is fully cooperating with the agencies. We would not like to make any comment at this point of time.”

Tapuriah, who was questioned by ED in January 2007, said over phone from Kolkata that he was unwell and had been asked by his doctor not to strain himself. “Hence, I am not fit to talk to you.”

Khashoggi connection

ED’s findings have disclosed Khan’s plan to finance a $500 million project of Khashoggi in a notarized document signed by him on 29 June 2003 in London.

A notarized document is certified by a licensed public officer who serves as an impartial witness to the signing of documents and establishes the authenticity of the signatures.

According to the investigation report prepared by Singh, and previewed by Mint, Khan had written “a private and confidential letter to Prabhu Guptara, director organizational development at Wolfsberg Executive Development Centre, Switzerland—a subsidiary of UBS—and asked for assistance in clearing up a situation” after UBS AG froze an account belonging to Khan, following a $300 million transfer from Khashoggi, labelling them as “funds from weapon sales”.

While the report is silent on the nature of the Khashoggi venture in which Khan was expected to invest or, indeed, how he met the Saudi arms dealer, it says that Tapuriah and Khan first met in the late 1980s.

At the time, the report says, Tapuriah was chairman of Incab Industries and was visiting Hyderabad to raise funds to revive his sick company.

“Khan’s name was referred by A.S. Chowdhary, who was an MP (member of Parliament), and Vijay Bhaskar Reddy of Andhra Pradesh, and was told that he (Khan) could arrange finance/funds from his sources and resources,” the ED report said, quoting Tapuriah.

The friendship between the two grew, and the Kolkata businessman claims to have helped Khan win contracts “for supply of scrap to Steel Authority of India Ltd and Tata Steel Ltd”.

The report claims Khan had $8.04 billion in his UBS account as on 8 December 2006. The report quotes a letter written by M. Rohner, wealth management executive at UBS, in 2006 that said: “Khan can withdraw $6 billion and was free to invest this amount as and when he chooses to do so and that the balance amount of $2.04 billion would remain bound with UBS until 15 January 2007 and after which Khan was free to invest the same as and when he chooses to do so.”

While investigations against Khan began in January 2007, it was only in February 2008 that the Mumbai Police booked him—for holding three fake passports.

Following this, Khan filed an anticipatory bail application in the Bombay high court, which was rejected. He remained at large, however and on 30 April 2008, a Mumbai court declared Khan a “proclaimed offender” after he failed to appear for a hearing at the court. After eight months, Khan surrendered at a Mumbai police station on 15 December 2008.

On 2 January, Khan was granted bail by a court in the fake passport case on condition that he would not leave India and appear before ED every alternate day for a month.

khushboo.n@livemint.com

Graphics by Ahmed Raza Khan / Mint

http://www.livemint.com/Articles/PrintArticle.aspx?artid=E43B9208-DE82-11DD-8175-000B5DABF636

 

Mystery millionaire

Posted online: Sunday , Jan 25, 2009 at 2252 hrs

Pune businessman Hassan Ali Khan was recently served a Rs 36,000-crore income tax notice for alleged money laundering. The Sunday Express looks at the evidence against the man and traces his story. By Ritu Sarin, Mohan Kumar & Chandan Haygunde

It has the makings of one of the biggest foreign exchange scandals. Ever. And proof of the extent of the alleged violations came on December 22, 2008, when the Enforcement Directorate (ED) slapped a show-cause notice on Pune businessman Hassan Ali Khan for “acquiring and holding” a staggering $8 billion (Rs 36,000 crore approximately) in a single bank account in Zurich, Switzerland.

The 18-page show-cause notice, available with The Sunday Express, has demanded that the businessman immediately repatriate the amount, with updated interest, through banking channels to India. Khan has been given one month’s time to reply to the show-cause notice and also explain how his funds grew from an initial deposit of $1.5 million in 1982 to a balance of $8 billion by 2006.

Khan, 55, was famous in Pune’s business circles as a flamboyant businessman and racetrack owner. On January 7, 2008—a day after raids by the Income Tax Department—he admitted to ED officials that he had NRI status at Dubai only till 2003. This meant that he would not have escaped FEMA. A day later, the ED recorded the statement of one of Khan’s associates, Kashinath Tapuriah, who confirmed the existence of documents proving the $8 billion deposits and also revealed Khan’s links with others in the unfolding money laundering scandal.

Arms dealer Adnan Khashoggi’s name was also found sprinkled in the impounded documents with a clear indication of at least one proposed $300 million deal between them for a chateau that Khan purchased in Switzerland.

The evidence

Correspondence between Khan and top managers of the UBS AG Zurich bank and bank statements, requested by Hassan himself, showed his last balance as $7.78 billion.

Statements of both Philip Anandraj and Tapuriah (described as Khan’s ‘adviser’) have proved to be very damaging for him since they unspooled several of his connections and foreign exchange transactions. Tapuriah, for instance, named two politicians as the ones who allegedly referred Khan to him (A.S. Chowdhary and Vijay Bhaskar Reddy).

During the probe, the ED obtained a document notarised by one Nicolas Ronald Rathbone Smith, of the Notary Public of London, who certified the genuineness of the signatures on Khan’s passports.

Khan, in this notarised statement of 2003, had allegedly mentioned the opening of the first UBS Singapore account in 1982 and noted how Adnan Khashoggi had assisted in the account being transferred to UBS in Zurich and how he later wanted to purchase a hotel in Switzerland.

ED officials contacted in Mumbai allege that a “considerable portion” of Khan’s Swiss bank funds could have been converted to ‘AAA’ UBS bonds and transferred to other banks there.

“It is suspected that the accounts with such huge deposits contained money originating from various international destinations and are proceeds of heinous crimes such as terrorism, arms trade, gun running, corruption and organised forgery, fraud and other crimes,” a confidential report filed by the ED in January 2008 and accessed by The Sunday Express, states.

The ED’s show-cause notice is also ominous, for it says, “The (present) complaint is restricted only to the dollar account with UBS AG, Zurich. Further investigations in respect of the other issues involved in the case are in progress and the same will be dealt with separately.”

The fallout of the scam on Khan has been immediate. Even as his panel of lawyers is understood to be drafting his reply to the show-cause notice, his opulent houses in Pune and Mumbai, his 32 horses and his vehicles (a Mercedes and a Porsche, among others) have been attached by the I-T Department. The Mumbai Police have lodged an FIR against him for allegedly possessing three passports.

In fact, it was after being on the run for almost a year that Khan finally made his appearance last month and surrendered before the Worli Police as he ran out of options to dodge the authorities. He was crippled as his passport as well as that of his second wife Rheema were seized by the Department and later impounded by the ED.

According to a top ED official, stage one of the investigation is focused on Khan, after which the role of his wife as well as those of Anandraj and Tapuriah will be probed.

The man

Khan settled down in Pune’s posh Koregaon Park in 2000 after marrying Rheema, daughter of Pune-based horse trainer Abbas Ahmed Abbas. They first met each other at the Mahalaxmi racecourse in Mumbai. Khan divorced his first wife Mehboob Unnisa Begum, with whom he used to live in Hyderabad’s Banjara Hills, and moved to Pune. Abbas, who now lives in a middle-class locality of Pune, told The Sunday Express, “My daughter is married to him. I have nothing more to say. I have no comments on the cases filed against him and the media reports.”

According to Khan’s account to investigating agencies, his father was an excise officer in Hyderabad, where Khan studied till Class 12, and went on to sell antiques, claiming to be a descendant of the Nizam’s family. He then started a car rental service in 1970, before switching, in 1988, to a metal trading business in Dubai. Khan said this business, called Great Ventures, closed down in 1993.

Meanwhile, Khan entered the world of horse racing in Hyderabad in 1991 with only two horses. Then in 1994, he began racing at Mumbai’s Mahalaxmi racecourse, where he also was a punter. Soon, he expanded his horse racing activities to Pune, Bangalore, Chennai and Delhi.

Police say his horses even began racing in Switzerland and London. Khan has reportedly won four races and was also a member of the Royal Western India Turf Club (RWITC), Pune. According to Imtiyaz Sait, a trainer at the RWITC, Khan used to sit alone in a corner of the members’ enclosure at the racecourse. “None of us knew him well. He kept to himself,” Sait said.

Many of his other ventures were failures. After closing down the car rental and then a scrap business, Khan started a jewellery shop in Kuwait in partnership with a man called Hussain from Jammu and Kashmir in 2006-07.

Pune Police say they interrogated Khan in March 2007 soon after his name appeared in the media for his alleged involvement in the multi-crore hawala racket.

The passport fraud

Khan possessed three passports, the first issued in Hyderabad, the second in Mumbai in September 1998, and the third in Patna in April, 1997. On how he lost his original passport in UK, Khan is believed to have said that “he owed a huge chunk” of money to some illegal Russian nationals who seized his passport. The Indian High Commission issued him a fresh passport.

His passports bear fake addresses and documents. The Worli Police have sent summons to several persons who they believe helped Khan get away. They allegedly include a Bandra-based builder, a Pune-based government official, and a few real estate agents from Lonavala who helped Khan rent apartments. Khan is alleged to have shifted to the private residence of a government official, paying a rent of around Rs 5,000 per day, in Lonavala between July and October 2008.

Khan is understood to have said that it was when he was staying in Tulip Building, Pune, in February last year that he came to know about the allegations of passport fraud. He claims he left for Mumbai with his wife and son after police came looking for him. He then stayed at his “friend” Yusuf Lakdawala’s resort for four months, from March to June 2008, during which time he moved the Bombay High Court seeking anticipatory bail, which was rejected. Since then, he was on the run.

The Worli Police then moved an application before the Bhoiwada Metropolitan Magistrate and on April 30, 2008, the court declared Khan an absconder. Khan surrendered on November 15 and after spending over 20 days in custody, was released on bail by the Sewree sessions court.

Khan’s lawyer Ishwariprasad Bagaria said in his defence: “Going through the preliminary reports of the Worli Police presented during the remand stage, there was no evidence against Hassan Ali Khan.” He claimed Khan hadn’t cheated while obtaining the passports. He said all documents submitted to the Regional Passport Office were genuine and that the police had registered a false case against him.

How that argument stands in court remains to be seen.

The other players

Philip Anandraj

Owner of an Indian restaurant in Zurich, Kormasutra, he was “found” at Khan’s Pune residence during the IT raid. He said he was there to recover $5 lakh from Khan. Khan wanted to acquire Kormasutra, he said.

Kashinath Tapuriah

Director of 16 Kolkata companies, he had sought Khan’s help for his sick firm. He helped Khan with contracts of supplying scrap to SAIL, Tata Steel.

Adnan Khashoggi

He is described as an arms dealer who gave the reference for opening Khan’s account in UBS Singapore. The show-cause notice says Khan and Khashoggi finalised a “deal” for the purchase of the Swiss ‘Chateau Gutsch’.

Swiss bankers

M. Rohner, at UBS Zurich, wrote to Khan, assuring him he could withdraw $6 billion and leave the remaining “bound” till January 2007. After Dr Peter Weilly, Markus Grossmann is mentioned as Khan’s portfolio manager.

How his bank account swelled

Evidence from a June 2003 document recovered by the agencies, duly notarised by the Notary Public of London

• Khan had an account with a deposit of $1.5 million with UBS Singapore. The recommendation was organised by Dr Peter Weilly through arms dealer Adnam Khashoggi, whose portfolio was handled by Weilly

• A payment of $240 million was approved by Weilly and accepted by Reto Hartman at UBS Singapore

• After the $240 million transaction, the account moved from UBS Singapore to UBS Zurich in 1986

• By December 1997, the deposit amount reached $560 million. Due to certain problems, Khan could not operate this account

• As on August 31 2006, the balance in the account was $6.6 billion

• Balance as on November 2, 2006: $7.7 billion

• Balance as on December 8, 2006: $8.04 billion

(With Mustafa Plumber and Smita Nair)

http://www.indianexpress.com/story-print/414865/

 

Taxindiaonline.com

Mr Obama, amending tax code cannot prevail over economics of global business; Tax haven issue: India needs to review all DTAAs!

TIOL - COB(WEB) - 134
MAY 07, 2009

By Shailendra Kumar, Editor

THE first week of May month, 2009 will always be remembered in the global fiscal history for two major events - one, the US President launched a crackdown on tax havens and decided to withdraw tax sops availed by the American companies for their international operations; and second, the Union Government of India, for the first time, went on record detailing the measures diligently taken and pursued to track down black money stashed away in tax havens. In response to a PIL filed before the Supreme Court, the Govt filed an affidavit and disclosed certain vital 'tissues' of the entire DNA system of black money.

First, what the US President has been trying to do is to shore up the dwindling revenue of Federal Treasury after offering many bail-out packages. While reacting to Mr Obama's proposal to amend the tax code to deny tax benefits to American companies having large matrix of international operations, one of our Netizens wrote in our ''Message Board'':

''Without prejudice to my loyalty to my nation, I feel that what Obama is trying to do for his own country is not a bad one. In one way, his desire to curb his country's companies availing tax concessions for getting jobs done on oursourcing basis and divert that money for promoting industrial developments within his own country cannot be viewed as anti-Indian. In fact our Govt should also take similar steps to give incentives to our own Indian Cos and even for FDI companies when they plan industrial and infrastructure developments within India so that our own sons and daughters and even grandsons and grand-daughters can stay in India and earn good income. There is no need for running out foreign countries to earn foreign currencies. Our Indian economic policies of the yester-years promoting Indian industries and infrastructure still deserve to be adopted rather than going for Dollars. Let's be Indians with Indian money and live a happy Indian life ...''

What one may smell from the comments of our Netizen is very similar to the steps proposed by Mr Obama. Both seem to be determined to overlook the irreversible change the global economy has undergone in the past one decade. And that is the world has become much more flatter for the global business. The global institutions like WTO have recorded tangible achievements by pulverising tariff as well as non-tariff barriers across the globe. Only some breathing period has been provided to the poor and developing countries to safeguard their own interests. The business which the city of Bangalore has bagged in the past 10 years is certainly not a gift from any American company which Mr Obama appears to be thinking aloud! It is the irresistible force of economics that compelled the American domiciled or European domiciled companies to outsource a part of their operations to Indian outfits in Bangalore or elsewhere in the country. The economics of business in the cut-throat global competition has become so grim and dictating that the American companies having international operations have no option but to minimise their cost in order to shore up their bottomlines and add value to the money invested by their shareholders across the globe.

Let's look at one of the possible scenarios as an aftermath of Mr Obama's fiscal policy. Once tax concessions are withdrawn, a large number of small and mid-sized American companies would become uncompetitive and unviable to survive in the ruthless market. This may compel them to switch their entire operations to a nearby island country or a tax haven (low tax rate State) and continue with their operations. The same may apply to large MNCs which can perhaps prefer doing business with the USA from outside its territory and pay tax only to the extent of the business generated there. Given the fact that most American MNCs have set up branches and subsidiaries across 100 countries, winding up the same to avoid a jump in tax liability in the USA would make a bad economics. So, what may make a good economics is to move out of the USA! And if it happenswhat impact it would have on the employment generation goal of Mr Obama could be an easy guess! A big question mark may stare straight in the face of White House strategists who appear to be relying too much on amendment in tax codes for correcting the course of global business! If it is so, it will be short-sighted. For the city of Bangalore, it would at best be a short-term setback, and such decisions cannot be sustainable in the long-term. Evidently, protectionism in the past has not borne sweeter fruits!

LET's now move to the second issue where the Apex Court of India has ignored the plea of the Govt counsels to dismiss the PIL, and did analyse the issue with a probing mind. Such an inference can be made from the observations that the Hon'ble Judges on the Bench who queried the Govt counsel - why some of the high-profile cases were not investigated under the Money Laundering (Prevention) Act? Why can't the Govt initiate criminal investigation in cases where it has information that huge funds have traversed through our physical borders and the funds have been parked in offshore centres or foreign banks sans approval from any competent authorities.

Let's first see what the Govt has stated in its affidavit:

++ on account of persistent follow up by the Central Government, the German Government, on 16th March 2009 informed that they were in a position to provide the information  and the said information was made available to the Central Government on 18.3.2009. However, the said information was made available on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement.

++ consequent to the information received from  the German Authorities, the said information has been forwarded to various taxation authorities concerned for action as appropriate under the provisions of the  Income Tax, 1961 and the Wealth Tax Act, 1957. Moreover, the said authorities have initiated the process of reopening the assessments under the Income Tax Act, 1961 and Wealth Tax Act, 1957.

Status of investigations / proceedings in the case of one Hasan Ali Khan and his alleged co-conspirator Kashinath Tapuria, in relation to alleged illicit deposits made by them in UBS Bank.

++ the said Hasan Ali Khan had not filed his tax returns for Assessment Years 2000-01 to 2006-07. On 5.1.2007, search under section 132 of the Income Tax Act, 1961 was conducted at the premises of Mr. Ali Khan in Pune and his associate Kashinath Tapuria. Pursuant to the search certain documents relating to UBS Bank were found which revealed that Mr. Ali Khan had access to sizeable amounts in the UBS Bank, and from the possession of Mr. Tapuria, documents revealing instruction notes issued by Mr. Ali Khan in December, 2006 from London to UBS Bank, directing transfer of funds from his account in the bank.

++ he Income tax Department sought verification of the contents of the documents relating to the bank accounts of Mr. Ali Khan in UBS Bank from the Swiss Government. However, the same was denied by placing reliance upon Article 26 of the Double Taxation Avoidance Agreement. Further, in view of the fact that no criminal case was pending against Mr. Ali Khan, recourse could not be taken to the Mutual Legal Assistance Treaty in Criminal Matters(between India and Swiss Government) and thus no headway could be made at that time.

++ Moreover, the material discovered pursuant to the search, on being forwarded to the Enforcement Directorate, led to detection of account with the UBS Bank in the name of Mrs. Rheema Khan (Wife of Ali Khan) which was operated by Ali Khan and reportedly the last transaction was a sum of USD 61,031. Further, the Income Tax Department, on the basis of  seized documents and other materials gathered during investigations, have raised total demand of Rs. 71848.59 Crore against the said Ali Khan, his wife, Rheema Khan and other associates.

From these facts revealed in the Affidavit what emerges and calls for urgent steps to be taken by the new Government which may be in place latest by first week of June this year are:

++ There is an acute need for a Task Force which could review the entire gamut of Double Taxation Avoidance Treaties, and focus on those countries which take shelter under the banking secrecy regulations to show overtures of non-cooperation in black money cases. India may insist on inserting a couple of Articles in the DTAA where the contracting states could be agreement bound to share banking and other types of information;

++ There is a need to strengthen our legislation so that even a case like Hasan Ali Khan could be immediately pursued from criminal investigation angle rather than pure black money perspective. Funds being illegally taken out of the country need to be viewed more seriously particularly in the backdrop of the fact that the RBI has hugely liberalised foreign exchange regimes to promote business of Indian corporates overseas. Facilitation is welcome but facilitation without compliance is dangerous for any economy.

++ What further indicates towards the urgent need for a new legislation to tackle this tax haven problem is the fact that even after obtaining sensitive information about the Indians stashing away funds in tax havens like Liechtenstein, what we can do at best is to reopen their assessments under the I-T Act and Wealth Tax-Act. None knows how old are these cases and whether they would be time-barred from the viewpoint of these tax laws. Limitation is an integral code of tax laws, and it cannot be said that the re-opening of their assessements may fetch some revenue to the exchequer. More than the revenue, such instances of smuggling out Indian capital need to be viewed more stringently.

++ Lastly, India needs to quickly join the rank of OECD members as this would help it in providing persuasive force in cases where amendments may be initiated for DTAAs.

Let's hope what the BJP and the PIL have done to bring this issue to the centrestage of constant debate at the national level, the new Union Government takes it further and to a logical conclusion.

http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=8992#


Saudi links traced to Hasan Ali

The Enforcement Directorate investigating Pune's billionaire horse breeder Hasan Ali have found Saudi links to him in the latest development.

Ali ha been so far been charged with alleged billion dollar frauds and also terror links.

Indian investigators claim to have found links between Ali and billionaire Saudi Arabian arms dealer, Adnan Khashoggi.

Enforcement Directorate sources told NDTV that Ali has received millions of dollars from Khashoggi into his Swiss accounts.

Adnan Khashoggi transferred US $300 million from his Chase Manhattan Bank account in New York into Hassan Ali's United Bank of Switzerland account in Zurich.

The Swiss authorities froze the account saying that the ''Funds were from weapons sale.''

Ali and his close associate Kashinath Tapuriah then adopted different techniques to try and make this account operational.

The link to Khashoggi adds a new dimension to the investigation into Ali.

Khashoggi is known in India as one of those named in the Jain Commisison of enquiry into the Rajiv Gandhi Assassination and globally for brokering arms deals between the US and Saudi Arabia.

Investigators say that this only convinces them of Ali's wide range of operations and contacts.

At the moment much of their leads are based on growing evidence of Ali's massive holdings in Swiss accounts.

Documents available with the ED, which they seized in searches at Ali's residence show that one of Hassan Ali's Swiss accounts had US $560 dollars in 1997.

Two years later, the same account mysteriously increased to $969 million. Most of this money is lying as liquid cash and bonds

Along with his partner Kashinath Tapuriah, Ali allegedly opened two fictitious companies Autumn Holdings and Paysons in the Virgin Islands and laundered money to the tune of US $280 million.

Shockingly a year after he was raided, the US $8 billion man still roams free. 

 http://72.14.235.132/search?q=cache:DPdj5ZaTnWoJ:circleof13.blogspot.com/2008/03/arms-dealers-doing-what-they-do-best.html+Kashi+Nath+Tapuria&cd=2&hl=en&ct=clnk&gl=in

Govt says it's on black money trail

3 May 2009, 0142 hrs IST, Dhananjay Mahapatra, TNN

 

NEW DELHI: The Centre on Saturday indicated to Supreme Court the possibility of Indians featuring among those who are found to have parked huge amounts of illicit money with the LGT Bank in the tax haven of Lichenstein, asserting that a serious effort was underway to retrieve the monies. ( Watch 

The hint that it may have located Indian nationals among those having secret deposits in the LGT Bank came in the much-awaited affidavit it filed in response to a PIL asking for measures to bring back money suspected to have been spirited away to be deposited in secret accounts. 

Wary of disclosing much at the initial stage of investigation, the UPA government said it has already activated Income Tax and Wealth Tax sleuths to scrutinise the data and take appropriate action. 

Blog: Who will form the next govt? 

But a clue that a number of Indians figure in the list of LGT Bank account holders, given to India by the German authorities on March 18, came from the assertion of the Department of Revenue that "the said authorities have initiated the process of reopening the assessments under the Income Tax Act, 1961, and Wealth Tax Act, 1957." 

The issue of money parked abroad has taken on a serious dimension because of the recession-inspired global consensus favouring an end to the "secret banking". 

The issue has acquired partisan overtones during the campaign for the Lok Sabha poll after BJP embraced it with full vigour, attracting sharp attack from the Congress which alleges that the saffron outfit has politicised the issue by exaggerating the scale. 

In its affidavit, the Centre made specific references to huge deposits in the Swiss bank by Pune-based Hasan Ali Khan and his associate, Kashinath Tapuria. 

The coordinated efforts of the I-T department and the Enforcement Directorate "led to detection of account with the UBS Bank in the name of Rheema Khan, wife of Hasan Ali Khan..", the Centre's affidavit settled by additional solicitor general Gopal Subramaniam said. 

While ED has issued a show cause notice to Hasan Ali Khan for contravention of provisions of the Foreign Exchange Management Act, 1999, for "unauthorisedly dealing of $8 billion", the I-T department, on the basis of seized documents and other materials gathered during investigations, "have raised a total demand of Rs 71,848.59 crore against Ali Khan, his wife Rheema and other associates", the Centre said. 

"The investigations carried out till date in respect of Kashinath Tapuria and his wife reveal existence of certain overseas bank accounts. The government is in the process of obtaining details of the said accounts and ED has seized their passports," the Centre said. 

The response came far too late than the self-imposed 48-hour deadline that the Centre had given itself in the Supreme Court on April 22 to make the Bench headed by Chief Justice K G Balakrishnan withhold issuance of notice on a PIL filed by renowned lawyer Ram Jethmalani and others, who had accused the UPA government of being lethargic in retrieving a possible Rs 70 lakh crore worth of black money stashed in foreign banks. 

The UPA government felt that the figure of Rs 70 lakh crore as black money bordered on fantasy and said: "There are no authentic figures about the amount of monies lying in those bank accounts." It said: "The present petition presumably pertains to monies lying in foreign accounts which are exclusive of lawful and legitimate deposits which can be made by both Indian residents and NRIs." 

After trashing the charge of inaction to retrieve the black money, the Centresaid it saw a close link between the PIL, its timing and the opposition BJP, whose prime ministerial candidate L K Advani had made an identical accusation. 

It said the entire PIL was based solely on an article written by one Raja Vaidyananthan in a Magazine, `Eternal India'. The Congress-led UPA government said Vaidyananthan is a member of BJP's Task Force on strategies to bring back `stashed funds'. 

The Centre also tried to draw an indirect link between Jethmalani and BJP through his son Mahesh Jethmalani, who is contesting on the BJP ticket from Mumbai. "The motivation of the public interest pursued by the petitioners is not very clear. The said Task Force of four members also included Gurumurthy and Mahesh Jethmalani, who is presently contesting the Parliament election on behalf of the BJP," it said. 

dhananjay.mahapatra@timesgroup.com 

http://timesofindia.indiatimes.com/articleshow/msid-4475406,prtpage-1.cms

 

BLACK MONEY
Details can’t be made public: Centre to SC
R Sedhuraman
Legal Correspondent

Supreme Court told…

  • Germany has provided details of secret bank accounts
  • Details cannot be made public due to confidentiality condition
  • Swiss govt approached for similar details
  • Politically motivated PIL deserves dismissal
  • SEBI monitoring PNs

New Delhi, May 2
The Centre today informed the Supreme Court that it had obtained from Germany details of secret bank accounts pertaining to Indian citizens "on the condition of strict confidentiality" and as such could not be made public.

The details had already been "forwarded" to various taxation authorities for "appropriate action" under the provisions of the Income Tax and Wealth Tax Acts, Priya VK Singh, Director in the Department of Revenue, Ministry of Finance, said in an affidavit filed in the court.

The information was received only on March 18 this year, but the tax authorities had already initiated the process of reopening the assessments under the Income Tax Act, 1961, and Wealth Tax Act, 1957, the Ministry said.

The government has filed the affidavit in response to a PIL filed by former Law Minister Ram Jethmalani, former Punjab police chief KPS Gill and four other "super senior citizens" seeking a direction for bringing back black money running into lakhs of crores stashed away in overseas tax havens.

The matter will come up for hearing in the apex court on Monday.

The Ministry said it first shot off a letter to Germany on February 27, 2008, the same day when media reports talked of German government’s willingness to share information available with it in respect of account holders in LGT Bank, Liechtenstein. Since then, the government relentlessly pursued the issue with Germany, sending out communication at least on 15 occasions, through letters, e-mails and telephonically, the affidavit said.

Further, India had “already approached” the Swiss government, seeking re-negotiation of the Article concerning exchange of information under the Double Taxation Avoidance Agreement (DTAA). “Under the circumstances, the Union government has acted with utmost expedition in the matter.”

All this showed that the contention of the petitioners, who also included former Lok Sabha secretary general Subhash Kashyap, that the government had failed to take any action to check the parallel economy by bringing back Rs 70 lakh crore siphoned off from the country was wrong, the government contended.

Apparently rebutting the charge that such a huge amount of black money had been taken out of the country, the affidavit said: “I state and submit that there are no authentic figures about the amount of money lying in those bank accounts.”

The PIL had talked of the Income Tax Department serving notices on one Hasan Ali Khan of Pune and his co-conspirators (Kashinath Tapuria and wife Chandrika from Kolkata), demanding a tax of Rs 40,000 crore and Rs 20,580 crore, respectively.

The Finance Ministry, however, gave a higher figure of Rs 71,848.59 crore. “…I state and submit that the Income Tax Department, on the basis of seized documents and other materials gathered during investigations, have raised total demand of Rs 71,848.59 crore against the said Ali Khan, his wife, Rheema Khan and other associates,” the Ministry official said.

Further, the Enforcement Directorate of the Ministry had, on December 29, 2008, issued a show cause notice to Hasan Ali Khan for “unauthorised dealing of USD 8 billion” (approximate) in contravention of the provisions of the Foreign Exchange Management Act, 1999. Khan filed his interim reply on January 7.

“…I state and submit that the investigation carried out till date, in respect of both Kashinath Tapuria and his wife Tapuria, reveals existence of certain overseas bank accounts. The government is in the process of obtaining details of the said accounts. The passports of Tapuria couple are under the possession” of the Directorate, the Ministry official said. The couple was last questioned on February 9, 23 and 24.

Questioning the timing and the political affiliations of some of the petitioners, the government said the issues raised by them pertained to “policy, regulation, economic affairs, international cooperation and political leadership and, therefore, do not qualify for examination by standards of judicial review”.

A number of people had sought and obtained black money details under the Right to Information Act, 2005, but the petitioners “have chosen to make wild, reckless and baseless allegations” against the Centre without taking recourse to such methods, the affidavit said.

“In view of the above, I state and submit that the allegation of inaction against the Central Government leveled by the Petitioner purportedly acting out of public interest are baseless and devoid of any merits and deserves to be dismissed with costs,” it said.

The PIL had relied on a newspaper article by one Raja Vaidyanathan who was a member of a Task Force constituted by the BJP to unearth black money, while Jethmalani’s son, Mahesh, was contesting the ongoing Lok Sabha poll on the saffron party ticket, the affidavit pointed out.

http://www.tribuneindia.com/2009/20090503/main4.htm

Swiss bank: The Big Lie!

10 May 2009 | India

 

http://www.hardnewsmedia.com/sites/beta3.hardnewsmedia.com/files/imagecache/Large/19feb16r.jpg

 

Swiss authorities claim that the Indian government submitted "forged" documents in the $8 billion Hassan Ali case. Has finance ministry lied to the Supreme Court? Exclusive report By : Sanjay Kapoor

  

Berne / New Delhi

  

Someone is not telling the truthIs it the Union finance ministry of the UPA government in Delhi, performing its last tango, caught in what is clearly a 'Swiss Bank Tangle'?

  

Last week in the Supreme Court, the central government's solicitor, responding to a Public Interest Litigation (PIL) that demanded government's action on retrieving Indian black money stashed in Swiss banks, had given the names of three Indians and how the agencies were following up on their case.

  

In a 29-page affidavit, the government had detailed the action it had taken against Pune-based stud farm owner, Hassan Ali Khan, his wife Rheema and Kolkata-based businessman, Kashi Nath Tapuria, who allegedly were holding $8 billion in an UBS account in Switzerland.

  

The Enforcement Directorate (ED), on its part, has issued a show cause notice to Khan for contravention of Foreign Exchange Management Act, 1999 after it found out during a raid in January 2007 that Khan had deposited around 8 billion dollars at the UBS Bank. The Income Tax department has raised a total demand of Rs 71,848.59 crore against Khan, his wife Rheema and other associates. Investigations so far have revealed overseas bank accounts of Kashi Nath Tapuria and his wife. The ED has seized their passports.

 

 

Hardnews travelled to Switzerland to chase a story on the Indian black money and Swiss Bank transparency issue, and learnt to its surprise that there was a manifest truth deficit on this issue.The most scandalous was the assertion by the Swiss justice ministry on the celebrated case of the mysterious Hassan Ali Khan and his account in Switzerland. In a communication from Folco Galli, Information chief of Eidgenössisches Justiz-und Polizeidepartement (EJPD) Bundesamt für Justiz (Swiss Department of Justice and Police) BJ, Berne, Hardnews was informed that the Indian authorities submitted "forged" documents to seek assistance on the Hassan Ali Khan case.

 

Galli's reply to Hardnews on this case is precise and direct and does not need any interpretation. Galli talks about $ 6 billion and not $ 8 billion as it is made out to be. Here is his categorical reply:

  

"In January 2007, Indian authorities have submitted in the case of Hassan Ali Khan a request for legal assistance to the Federal Office of Justice (FoJ)... In the same month, the FoJ informed the Indian authorities as follows: Concerning the presumed transfer of 6 billion USD, domestic inquiry has revealed that the banking information provided with the request for legal assistance are forged documents.Accordingly, the supposed transfer to UBS accounts has no reality.

  

Concerning the request Swiss authorities need some specification in order to be able to examine and possibly to accept and execute it:

  

- a confirmation that the Indian investigation is a criminal one (no tax or related investigation)


- a better description of the predicate offences which are object of the Indian money laundering investigation

 
- to show the relation between the predicate offences and the accounts in Switzerland... In March 2007, the Indian Embassy submitted some complements to the FoJ.

  

In April 2007, the FoJ informed the Embassy that the complements don't include the necessary specification. Without these information, Swiss authorities can't examine whether the conditions to grant legal assistance are fulfilled or not. Indian authorities haven't submitted the necessary specification so far."

To reiterate, Galli says the following: first, the documents that were given by Indian authorities were forged and, therefore, the transfer of Indian funds to UBS accounts "has no reality"Swiss authorities want to provide further assistance in that case if the Indian authorities could satisfy the Swiss government's demand to establish dual criminality - what is crime in India is a crime in Switzerland. The Swiss also wanted to know whether Khan's offence was an object of Indian money laundering. Since April 2007, Indian government has not responded to Swiss authorities on this issue.

  

Interestingly, Supreme Court, too, had asked why the Indian government had not slapped money laundering charges against Khan and Tapuria.

  

Galli, in his communication, also informs that most requests for legal assistance come from neighbouring and other European states. " The Indian authorities submit only a few requests per year to Switzerland." Galli did not elaborate on the quality of these requests and what came of them.

  

This is not the first time that the Swiss had problems with Indian documentation. Even in the Bofors case, Swiss courts had refused to entertain some of the documents as they were illegible.

 

The moot question is: were forged documents created deliberately to prevent transfer of funds to India or the account does not exist at all?

  

Galli's answer does not preclude the possibility of such an account as he expects the Indian government to furnish more authentic details to take the probe further.Evidence that the account may exist lies in the huge fine that has been imposed by income tax authorities on Khan and his associates.

  

The question is: who are behind this charade?

  

It seems that the UBS managed to convince the Reserve Bank of India (RBI) of their integrity, which had put their license on hold for retail banking in India claiming lack of cooperation in tracking Hassan Ali Khan's money trail. The ED that looks into foreign exchange related crimes gave the clearance seemingly after giving credibility to Swiss government claims. It is reasonable to infer that both the ED and Swiss Bank were on the same page on the quality of evidence against Khan. Earlier, Swiss Bankers' Association president Pierre G Mirabaud, during a visit to India last year, had put the onus of getting to the truth on Khan's money trail on New Delhi.

 

 

Another aspect investigated by Hardnews was how much of Indian funds are stashed in the Swiss banks. Is it really Rs 70 lakh crore as claimed by BJP's prime ministerial candidate or is it less? It was important to get an official view from the Swiss Bankers' Association and square it with all the figures bandied around in India.

 

 The Swiss Bankers' Association Communication Director, James Nason, told Hardnews in Berne about the money held in their accounts. The Swiss National Bank, Nason stated, comes out with details of bonds and securities held in custody account in Switzerland. At the end of 2008, the total was 3,822 billion CHF (Swiss Frank = Rs 43). Out of this, 2,190 billion CHF was of foreign entities that included the government, institutional and private etc. Indians had 4,306 million CHF liabilities; this includes both the custody and fiduciary accounts. China, on the other hand, had 15,650 million CHF alone in custody account. Nason reiterates that all of this is not "private money", it could be government, institutional or whatever.

  

Those who know the ways of Swiss banking like the author of the celebrated book on Swiss banking, (Switzerland - a rogue state?) Viktor Parma, claims that the banks in his country do not give information readily and are good at buying time. They were forced to yield to US demands under President Barack Obama as it enjoys a privileged position. The big question is: will the Swiss treat India, even if LK Advani becomes the prime minister and chases these funds, with some amount of respect?

  

Sanjay Kapoor is the Editor of Hardnews monthly magazine and the author of Bad Money Bad Politics - The untold Hawala story.

 

http://www.hardnewsmedia.com/2009/05/2912

 

 

In this petition there have been filings 3 times

Read full petition at http://www.roguepolice.com/pil20.htm

Additional affdavit filed 12.2.2009...http://www.roguepolice.com/pil20aff.htm .... ( this one )

Addl Cr Application filed on 25.3.2009, after the judges tried to dismiss my PIL read at:...http://www.RoguePolice.com/appli209.htm

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION

DISTRICT: MUMBAI


PUBLIC INTEREST LITIGATION NO.: 20 OF 2008 Affidavit 62 / 2009 Filed on 12.1.2009


Indur Kartar Chhugani ….Petitioner 


V E R S U S


Union of India, represented by 
the Home Secretary, Ministry of Home Affairs,
Government of India, And Others ... Respondents


AFFIDAVIT


I Indur Kartar Chhugani age 61 years, residing at 501/502 Pinky Panorama Co-operative Society, 6th Road, Khar (West) Mumbai 400 052, do hereby state on oath and solemn affirmation as under:-

1. After the Mumbai Bomb Blasts in 1993, the Government of India had (through its order No S/7973/SS (ISP)/93 dated 9th July 1993 established a committee to take stock of all available information about the activities of crime syndicates / Mafia organizations, which had developed links with and were being protected by government functionaries and political personalities. 

2. Based on the recommendations of the committee, government was to determine the need, if any, to establish a special organization / agency to regularly collect information and pursue cases against such elements.

3. The committee was headed by the then Home Secretary Shri N. N Vohra as chairman and Special Secretary (Internal Security and Police), MHA was subsequently added as a member of this committee.

4. This So called “VOHRA COMMITTEE REPORT” was submitted to the Government on 5.10.1993, suggesting various recommendations.

5. In Para 2.1 it is stated "From the various reports, it as apparent that the activities of Memon Brothers and Dawood Ibrahim had progressed over the years, leading to the establishment of a powerful network. This could not have happened without these elements having been protected by functionaries of the concerned Government departments, especially Customs, Income Tax, Police and others.It was therefore necessary to identify the linkages.

6. InPara 3.1 it is stated “A Report on the nexus between the Bombay City Police and the Bombay under-world was prepared by CBI in 1986. It would be useful to institute a fresh study by CBI, on the basis of which appropriate administrative/legal measures could be initiated.

7. In Para 6.2 (ii) it is stated “These syndicates have acquired substantial financial muscle and social respectability and have successfully corrupted the Government machinery at all levels and wield enough influence to make the task of Investigating and Prosecuting agencies extremely difficult; even the members of the judicial system have not escaped the embrace of the Mafia. 

8. The committee made various suggestions for action against those in Government helping the Mafia and creating a nodal agency for sharing information between different departments of the Government. If the suggestions had been followed, the terrorist attack that took place on 26/11 could have been stopped. Attached is Copy of VOHRA COMMITTEE REPORT as EXHIBIT “A”

9. Having ignored all the recommendations of the VOHRA COMMITTEE REPORT, Now chief minister Ashok Chavan has set up a two-member committee on December 30 to probe into the alleged lapses in tackling the November 26 terror attacks. The committee, which has been asked to submit its report within two months, will examine whether the Mumbai police took prompt action. Attached as EXHIBIT “B” is the Times of India report to that effect. 


10. Various newspaper Reports have appeared, which only confirm, the findings of the inquiry report. The reporters who are credited, with the story, must have all the information. Attached are reports as EXHIBIT “C” Colly.

11. Media Reports attached as EXHIBIT “C” report a Senior official having said “What is the point in talking about extraditing Dawood from Pakistan when we do not have the guts to utilise his properties in Mumbai?’’ . Also an India-Today report from Issue dated 9.1.2009 reports of rift and infighting amongst Sr Police Officials and states “The constant tussle between the ATS and the Crime Branch may be legion, but it is one that suits the politicians as plum postings are decided not on the basis of merit but political connections, caste and religion”.

12. In April 1989, Mr Rahul Singh then Editor of “The Sunday Observer”, had in a front page report, stated that Dr P S Pasricha (then a DCP) was hosting Khalistani terrorists, in his home at Mumbai. The Mumbai Police after getting insufficient proof, concerning the report, had arrested Mr Rahul Singh. 

My humble prayers are that in view of such a comprehensive report by a committee formed by the Central Government , and its detailed findings , this Honble Court be pleased to make this petition final.


I Indur Kartar Chhugani age 61 years, residing at 501/502 Pinky Panorama Co-operative Society, 6th Road, Khar (West) Mumbai 400 052, hereby state on oath that whatever is tated above, is true, to the best of my knowledge and belief.

Indur Kartar Chhugani

Mumbai
Dated 12.1.2009 




A F F I R M A T I O N


I Indur K. Chhugani, son of Late Kartar Chhugani Aged: 61 years; Occupation: Social Work, citizen of India, Resident of 501-502, Pinky Panorama CHS Ltd., 6th Road, Khar (W), Mumbai - 400 052, the Petitioner above-named, do hereby solemnly affirm and state that I have read the contents of the foregoing paragraphs and whatever stated therein is true and correct to the best of my knowledge and belief. 


Indur Kartar Chhugani
(petitioner)

Mumbai : 12 /1 /2000 






Identified by me 

.........................................................................................

Reproduced from The Times of India January 4, 2009 page 3 .............EXH "B"

TERMS OF REFERENCE 

CARNAGE IN MUMBAI 

Committee to probe if cops acted swiftly on terror intel 

Prafulla Marpakwar | TNN 


Mumbai: Notwithstanding the denial by both state director-general of police A N Roy and Mumbai police chief Hasan Gafoor, the two-member committee headed by former chief secretary Ram Pradhan will probe into the alleged failure of law-enforcing agencies to act on intelligence inputs provided by central intelligence organisations. 

After a prolonged delay, chief minister Ashok Chavan set up a two-member committee on December 30 to probe into the alleged lapses in tackling the November 26 terror attacks. Retired IPS officer V Balachandran is the other member of the panel. 
The committee, which has been asked to submit its report within two months, will examine whether the Mumbai police took prompt action 
during the 26/11 terror strikes. “We have set up the committee and expect it to submit the report in a time-bound manner,’’ Chavan told TOI. 
Even as there were specific reports that the Intelligence Bureau had specifically warned the Mumbai police about possible terror attacks on fivestar hotels in south Mumbai, the cops denied it, saying there was no communication from the Centre. 
A senior government official said as it was a committee, Pradhan would not have the power to summon any official or individual to seek information on the attacks.

“We feel the probe should have been initiated under the Commissions of Inquiry Act and headed by a retired judge of the high court. In that event, the presiding officer would have all judicial powers to summon an individual,’’ the official said. 


.........................................................................................

Reproduced from The Times of India December 27, 2008 front page .............EXH "C"...1

Dawood celebrates quiet b’day in Islamabad 

S Balakrishnan | TNN 

Mumbai: India’s most wanted fugitive had an uncharacteristically subdued 53rd birthday on Friday. Pakistan’s Inter Services Intelligence (ISI) quietly relocated Dawood Ibrahim to a plush safehouse in Islamabad. Sources in the security agencies said Dawood was planning a big bash on his birthday in Karachi on Friday, but wary of the attention it would attract from the world media and foreign intelligence agencies, the ISI chose to whisk him away from the spotlight. Apparently, the party in the Pak capital was a relatively lowkey affair attended by senior ISI officials, Dawood’s close friends and an international arms dealer. 

Pakistan has been routinely denying that Dawood—who is also a suspect in the Mumbai 26/11 attack—is holed up in its territory. 

Most of his business associates in Mumbai avoided going to Pakistan to greet the don lest they be interrogated on their return. In the past they would go to Dubai, from where the D Company made arrangements for them to be flown to Karachi with the blessings of the ISI. 

Meanwhile, security agencies are seething with anger because their suggestion to put 24 properties belonging to Dawood in Mumbai to government use has not found favour with the Centre as yet. “We have recommended that the properties be used to build police stations or even house the offices of the newly constituted National Investigation Agencies. But no one in Delhi seems to care. What is the point in talking about extraditing Dawood from Pakistan when we do not have the guts to utilise his properties in Mumbai?’’ a senior official observed. 

The city police is also still to receive the green signal from the state government to question former revenue minister Narayan Rane about his allegation that he knows the names of the politicians who financed and provided logistical support to the November 26 massacre in Mumbai. 

.........................................................................................

Reproduced from The Times of India December 31, 2008 front page.............EXH "C"...2

Rs 36,000 cr ED notice to Hassan Ali 

Pranati Mehra | TNN 

Mumbai: The Enforcement Dire c t o r at e (ED) issued a show-cause notice to flamboyant Pune businessman Hassan Ali Khan on Tuesday under the Foreign Exchange Management Act (FEMA) for allegedly acquiring a whopping Rs 36,000 crore illegally. 

Shockingly, the ED’s investigation has indicated that the portfolio manager of international arms dealer Adnan Khashoggi dealt with Khan extensively in regard to one of his Swiss accounts. 

Under FEMA, the maximum penalty imposed can be three times the amount involved. If imposed in this case, it would amount to a whopping Rs 1.08 lakh crore. 

Notarized statement helps ED trace Hassan Ali’s deal with Khashoggi 

Mumbai: A show-cause notice (SCN), signed by the Enforcement Directorate’s special director K Nageshwar Rao, was issued at businessman Hassan Ali Khan’s Koregaon Park house at Pune and his Pedder Road residence in Mumbai o Tuesday even as ED officers are questioning him at Arthur Road Jail in the money laundering case also registered against him. Khan has been arrested for alleged passport offences by the Mumbai police. 

Khan was raided by the Income Tax department, Mumbai, in 2007 and found to be operating a bank account in UBS, Zurich, with a sum of US $8,000.45 million. That raid spawned a host of investigations against him. The documents of the account were recovered from his Pune house. Estimates of the total Indian money stashed in Swiss banks is about US $1,410 bn. 

The ED has traced Khan’s alleged transaction with arms dealer Adnan Khashoggi through a notarized statement of Khan signed on June 29, 2003 in London. The document contains a letter written by Khan to Prabhu Guptara, director, Organizational Development, Woflsberg Executive Development Centre, Switzerland (a subsidiary of UBS), explaining why one of his Swiss accounts had been tagged with the remark: ‘Funds from weapons sales’, and had been made inoperable. 

The letter explained the circumstances in which Khan first opened an account with UBS Singapore in 1982 with $1.5 million, through Retro Hartmann of UBS Singapore and then how Dr Peter Weilly, the portfolio manager of Khashoggi, allegedly took over as his manager. Khan had received $300m in this account allegedly from Khashoggi’s Chase Manhattan bank account in New York. After the document was notarized by a UK notary on June 29, 2003, Khan seems to have allegedly reported his Indian passport as lost in London and acquired a new passport there. A copy of the first page of the old passport is enclosed with the notarised document. 

The probe has also thrown up ‘evidence’ against Khan’s associate Kashinath Tapuria, who said two politicians,including a senior Congressman, had referred Khan to him during his days of financial difficulties. The ED’s next showcause is likely to include Tapuria and Philip Anandraj, Khan’s old friend and creditor, who was in his Pune house on the day of the I-T raid. Some others are also likely to be named. 

.........................................................................................



From India-Today issue of January 9, 2009..............EXH "C"...3

Force divider 
Malini Bhupta and Swati Mathur 
December 26, 2008 

India Today expert view on Force divider

It was the foot soldiers who fell prey to the terrorists’ bullets in the Mumbai attacksA German army commander once famously said of the British Army that it was a bunch of “lions led by donkeys”. The reference was to the soldiers who were led to their deaths by inept generals during the First World War. In Mumbai, a similar tragedy was unveiled on November 26, as the top brass of Mumbai Police took the backseat in the comfort of their luxury cars while their brave footsoldiers fell to terrorists’ bullets.

The mandatory back-patting and self-congratulations over, the Mumbai Police top brass is now faced with uncomfortable questions about the quality of their leadership. 

In response to opposition leader Ramdas Kadam’s charges against Commissioner of Police Hasan Gafoor and Director-General (DG) of Police A.N. Roy, all that Chief Minister Ashok Chavan would commit last week was a high-level probe into the alleged lapses, an indication of the confusion at the top political levels. 

The announcement was made after the Shiv Sena and the BJP demanded removal of Roy and Gafoor, along with Home Secretary Chitkala Zutshi. The three have been squarely blamed for the alleged lapses. Despite the pointed fingers, the Mumbai Police is a divided house. One would expect that this crisis would have come as a wake-up call for the police force and their political masters, but the intense infighting and one-upmanship indicates that any kind of change is a long way off.


The fact that the chief minister and his deputy are from different parties adds to the problemsBe it Gafoor’s refusal to cooperate with the Federal Bureau of Investigation (FBI) team, which was left hanging for three days, or keeping the Anti-Terror Squad (ATS) out of investigations, or even leaking their “heroic footage” during operations, the Mumbai Police has left no stone unturned in bungling. All attempts to reach the commissioner and the DG failed as they refused to take calls or respond to faxes.

Senior officers attribute the leadership crisis to the politicisation of the force and the rift between the DG and the commissioner, which intensified during Roy’s tenure as commissioner of Mumbai. This battle is now beginning to impact the investigations with the ATS probing only the CST attacks.

Since its inception in July 2004, all terror attacks in the state, except 26/11, have been investigated by this special squad. However, since the squad comes under the DG, it’s getting a raw deal. Says former DGP of Maharashtra Arvind Inamdar, “Ideally, the investigations should have been given to the ATS. However, since 2000, the Mumbai commissioner of Police started reporting to the home minister and home secretary instead of the DG. This goes against the concept of one force and one leader.” 

Strangely, sources in the Home Ministry justify the decision by saying that the squad is “less capable” than the Crime Branch.

The constant tussle between the ATS and the Crime Branch may be legion, but it is one that suits the politicians as plum postings are decided not on the basis of merit but political connections, caste and religion. Many senior officers allege that the Mumbai Police chief’s “leadership failure” and coterie politics has demotivated the already ineffective force. Says Nitin Gadkari, BJP general secretary, Maharashtra: “The ruling parties want to appoint their officers as district SPs to get their work done. The state DGP A.N. Roy works under the influence of Sharad Pawar, so he never worked with the chief minister.”

It didn’t help matters that while Mumbai was battling terrorists, the appointment of the DG was being contested in the Bombay High Court. Says Gopinath Munde of the BJP, “There are certain regulations for IPS officers’ postings. The CAT order set aside Roy’s appointment, but the state Government continues to retain him as DG.” The division between the office of Mumbai police chief and the DG became apparent when the action shifted to Maharashtra Police headquarters, as Roy coordinated with the chief secretary and the Home Ministry for deployment of the National Security Guard, which effectively led to a division in the force.

It is the failure of leadership that is more disconcerting. As the crisis peaked after the first couple of hours, Gafoor camped outside the Trident-Oberoi in his Honda City, along with Additional Commissioner (Armed Police) Raja E. Pawar and Additional Commissioner (Protection and Security) Vinay M. Kargaonkar. Several senior officers were not even consulted. Captain Anurag Grover, formerly with the 21 PARA (Special Forces) and an eyewitness to the operations at the Trident, says: “There was lack of coordination between agencies that were placed inside and outside the hotel. The heads of the multiple agencies didn’t even have their telephone numbers or radio frequencies.”

The mayhem started from the police control room, which should have ideally been manned by the Joint Commissioner of Police (Administration) Bhagwant D. More, who was camping at Nariman House. More refused to comment when contacted. In the absence of any clear leadership, Joint Commissioner of Police (Crime) Rakesh Maria took charge of the control room. The biggest criticism that is being levelled against the police commissioner is that he sat with his coterie outside the Trident, waiting for the armed forces to arrive, refusing to engage with senior IPS officers.

The willful behaviour of the commissioner peaked, say senior officers, when the FBI team arrived. At a meeting held at the DG’s office, where senior Mumbai police officers, IB officials and members of the Home Ministry were present, it was decided that key evidence comprising the GPS data and copies of SAT phone intercepts would be shared with the FBI team. However, Gafoor refused to do so when the team landed at his office. The evidence was shared three days later, after the Home Ministry and senior IB officials intervened.

With the Centre turning its attention towards Maharashtra, Pandora’s box of troubles may have just opened for the state police. Should this state of affairs continue and, god forbid, should Mumbai, yet again, become the target of a terror attack, the damage could be much worse.
—with inputs from Aditi Pai

http://www.roguepolice.com/pil20aff.htm

Swiss bank: The Big Lie!

10 May 2009 | India

http://www.hardnewsmedia.com/sites/beta3.hardnewsmedia.com/files/imagecache/Large/19feb16r.jpg 

Swiss authorities claim that the Indian government submitted "forged" documents in the $8 billion Hassan Ali case. Has finance ministry lied to the Supreme Court? Exclusive report By : Sanjay Kapoor 

Berne / New Delhi 

Someone is not telling the truthIs it the Union finance ministry of the UPA government in Delhi, performing its last tango, caught in what is clearly a 'Swiss Bank Tangle'? 

Last week in the Supreme Court, the central government's solicitor, responding to a Public Interest Litigation (PIL) that demanded government's action on retrieving Indian black money stashed in Swiss banks, had given the names of three Indians and how the agencies were following up on their case. 

In a 29-page affidavit, the government had detailed the action it had taken against Pune-based stud farm owner, Hassan Ali Khan, his wife Rheema and Kolkata-based businessman, Kashi Nath Tapuria, who allegedly were holding $8 billion in an UBS account in Switzerland.

The Enforcement Directorate (ED), on its part, has issued a show cause notice to Khan for contravention of Foreign Exchange Management Act, 1999 after it found out during a raid in January 2007 that Khan had deposited around 8 billion dollars at the UBS Bank. The Income Tax department has raised a total demand of Rs 71,848.59 crore against Khan, his wife Rheema and other associates. Investigations so far have revealed overseas bank accounts of Kashi Nath Tapuria and his wife. The ED has seized their passports. 

Hardnews travelled to Switzerland to chase a story on the Indian black money and Swiss Bank transparency issue, and learnt to its surprise that there was a manifest truth deficit on this issue.The most scandalous was the assertion by the Swiss justice ministry on the celebrated case of the mysterious Hassan Ali Khan and his account in Switzerland. In a communication from Folco Galli, Information chief of Eidgenössisches Justiz-und Polizeidepartement (EJPD) Bundesamt für Justiz (Swiss Department of Justice and Police) BJ, Berne, Hardnews was informed that the Indian authorities submitted "forged" documents to seek assistance on the Hassan Ali Khan case. 

Galli's reply to Hardnews on this case is precise and direct and does not need any interpretation. Galli talks about $ 6 billion and not $ 8 billion as it is made out to be. Here is his categorical reply:  

"In January 2007, Indian authorities have submitted in the case of Hassan Ali Khan a request for legal assistance to the Federal Office of Justice (FoJ)... In the same month, the FoJ informed the Indian authorities as follows: Concerning the presumed transfer of 6 billion USD, domestic inquiry has revealed that the banking information provided with the request for legal assistance are forged documents.Accordingly, the supposed transfer to UBS accounts has no reality.  

Concerning the request Swiss authorities need some specification in order to be able to examine and possibly to accept and execute it:  

- a confirmation that the Indian investigation is a criminal one (no tax or related investigation)


- a better description of the predicate offences which are object of the Indian money laundering investigation

 
- to show the relation between the predicate offences and the accounts in Switzerland... In March 2007, the Indian Embassy submitted some complements to the FoJ.  

In April 2007, the FoJ informed the Embassy that the complements don't include the necessary specification. Without these information, Swiss authorities can't examine whether the conditions to grant legal assistance are fulfilled or not. Indian authorities haven't submitted the necessary specification so far."

To reiterate, Galli says the following: first, the documents that were given by Indian authorities were forged and, therefore, the transfer of Indian funds to UBS accounts "has no reality"Swiss authorities want to provide further assistance in that case if the Indian authorities could satisfy the Swiss government's demand to establish dual criminality - what is crime in India is a crime in Switzerland. The Swiss also wanted to know whether Khan's offence was an object of Indian money laundering. Since April 2007, Indian government has not responded to Swiss authorities on this issue.  

Interestingly, Supreme Court, too, had asked why the Indian government had not slapped money laundering charges against Khan and Tapuria.  

Galli, in his communication, also informs that most requests for legal assistance come from neighbouring and other European states. " The Indian authorities submit only a few requests per year to Switzerland." Galli did not elaborate on the quality of these requests and what came of them.  

This is not the first time that the Swiss had problems with Indian documentation. Even in the Bofors case, Swiss courts had refused to entertain some of the documents as they were illegible. 

The moot question is: were forged documents created deliberately to prevent transfer of funds to India or the account does not exist at all?  

Galli's answer does not preclude the possibility of such an account as he expects the Indian government to furnish more authentic details to take the probe further.Evidence that the account may exist lies in the huge fine that has been imposed by income tax authorities on Khan and his associates.  

The question is: who are behind this charade?  

It seems that the UBS managed to convince the Reserve Bank of India (RBI) of their integrity, which had put their license on hold for retail banking in India claiming lack of cooperation in tracking Hassan Ali Khan's money trail. The ED that looks into foreign exchange related crimes gave the clearance seemingly after giving credibility to Swiss government claims. It is reasonable to infer that both the ED and Swiss Bank were on the same page on the quality of evidence against Khan. Earlier, Swiss Bankers' Association president Pierre G Mirabaud, during a visit to India last year, had put the onus of getting to the truth on Khan's money trail on New Delhi. 

Another aspect investigated by Hardnews was how much of Indian funds are stashed in the Swiss banks. Is it really Rs 70 lakh crore as claimed by BJP's prime ministerial candidate or is it less? It was important to get an official view from the Swiss Bankers' Association and square it with all the figures bandied around in India. 

The Swiss Bankers' Association Communication Director, James Nason, told Hardnews in Berne about the money held in their accounts. The Swiss National Bank, Nason stated, comes out with details of bonds and securities held in custody account in Switzerland. At the end of 2008, the total was 3,822 billion CHF (Swiss Frank = Rs 43). Out of this, 2,190 billion CHF was of foreign entities that included the government, institutional and private etc. Indians had 4,306 million CHF liabilities; this includes both the custody and fiduciary accounts. China, on the other hand, had 15,650 million CHF alone in custody account. Nason reiterates that all of this is not "private money", it could be government, institutional or whatever. 

Those who know the ways of Swiss banking like the author of the celebrated book on Swiss banking, (Switzerland - a rogue state?) Viktor Parma, claims that the banks in his country do not give information readily and are good at buying time. They were forced to yield to US demands under President Barack Obama as it enjoys a privileged position. The big question is: will the Swiss treat India, even if LK Advani becomes the prime minister and chases these funds, with some amount of respect?  

Sanjay Kapoor is the Editor of Hardnews monthly magazine and the author of Bad Money Bad Politics - The untold Hawala story.

 

http://www.hardnewsmedia.com/2009/05/2912

Ouagadougou, public loot in tax havens; Hindusthan should get serious, emulate Germany

 

http://www.guardian.co.uk/business/feedarticle/8494400/print

  

Steinbrueck presses Switzerland on tax dodge talks

 Reuters,

 Thursday May 7 2009

 By Noah Barkin

  

BERLIN, May 7 (Reuters) -  German Finance Minister Peer Steinbrueck pressed Switzerland on Thursday to enter "concrete" talks on loosening its bank secrecy rules, saying the country's laws actively encouraged Germans to avoid paying taxes at home.  

In a speech to the Bundestag lower house of parliament, Steinbrueck renewed his criticism of Germany's southern neighbour, saying it had not yet taken the steps necessary to convince him it was serious about combating tax cheaters.  

" Luxembourg and Austria are already in talks with us and we are having the dialogue with them we were seeking. In these cases the problem has been taken care of, "  Steinbrueck said. 

 " I am waiting in the case of Switzerland that we move on from preliminary exchanges towards concrete negotiations. This should not last years but come to a conclusion soon." 

 He said Switzerland and Liechtenstein had laws that actively encouraged Germans to dodge taxes, estimating the annual loss to government coffers from tax evasion at 100 billion euros. 

 Switzerland said on Wednesday it wanted to clinch 12 new bilateral tax deals by the end of 2009 to be removed from a tax haven "grey list". 

In a list published last month, the Paris-based Organisation for Economic Cooperation and Development (OECD) named and shamed countries it says do not do enough to prevent tax dodging. The G20 is threatening those unwilling to cooperate with sanctions.  

Steinbrueck was speaking during a parliamentary debate on a draft law that would give Berlin new powers to oversee companies and individuals that do business in tax havens.  

The domestic measures are meant to complement an international drive, spearheaded by Steinbrueck, to pressure countries like Switzerland and Liechtenstein to relax their rules on bank secrecy. Germany launched the crackdown after investigators uncovered evidence last year that wealthy Germans were secretly parking cash abroad.  

" OUAGADOUGOU "

  

Steinbrueck has drawn the ire of European partners by publicly chastising them for their banking policies.  

He angered Switzerland last year by calling for a " carrot and stick " approach to the tax issue and sparked outrage in March when he compared Germany's southern neighbour to " Indians " running scared from the cavalry.  

After those comments, a Swiss member of parliament likened Steinbrueck to a Nazi.  

On Tuesday at a meeting of European Union finance ministers in Brussels, Steinbrueck struck again.  

In an apparent joke, he lumped Luxembourg, Liechtenstein, Switzerland and Austria together with Ouagadougou, the capital of Burkina Faso, as problem tax havens. 

The comments drew rebukes from Switzerland and Luxembourg, as well as Free Democrat (FDP) Hermann Otto Solms, who spoke in the Bundestag shortly before Steinbrueck took the podium.  

" You should know that Ouagadougou is not a country but a city. Burkina Faso is the country and this country is not on the OECD list of tax havens,"  Solms said.  

" It would be better if you got your descriptions right, distanced yourself from this radical approach and negotiated with our allies instead of threatening them. "  

Steinbrueck appeared to show some regret for his strong rhetoric, saying: " I must concede that tax dodging was not very prevalent among the Indians and in that sense, this was perhaps the worst analogy I've chosen."  

But he quickly returned to a confrontational tone, warning German banks that they would not escape his tax dodging drive.  

" This applies also to the activities of German banks. Not just those in which the government holds a stake like Commerzbank, but also by fully state-owned institutions," he said, mentioning regional Landesbanks.

 

(Additional reporting by Kerstin Gehmlich and Madeline Chambers; Editing by Victoria Main)

 

---------------------------------------------------------------------------------------

http://online.wsj.com/article/SB124172570308697401.html#printMode

 MAY 8, 2009

 Singapore Stands Set to Defend Bank Secrecy, to a Point

 By COSTAS PARIS

  

SINGAPORE -- This city-state,which styles itself as Asia's Switzerland for offshore investors,will resist pressure to open its books to Western authorities, say people familiar with the government's thinking.  

Amid worries about money laundering and tax evasion, European negotiators are asking Singapore to hand over the names of Europeans who open accounts in Singapore, said a senior European Union official.  

Singapore is willing to concede on some demands but is ready to fight moves it thinks would endanger the island's status as a destination for overseas wealth, according to people familiar with early talks.

 Willing to Talk

 The authorities " will negotiate long and hard " with each country individually, said a person familiar with government thinking.

 

" Singapore won't scare away its affluent foreigners. "

  

The government " will be selective about whom it negotiates with and it will in no way give the impression that bank secrecy here will be compromised,"  this person said. " Bank secrecy is a matter of national interest for financial centers like Singapore. Anyone who expects fast information about a foreigner with a bank account here will be disappointed."

 

Singapore has declined to give overseas authorities information on foreigners' bank-deposit interest or investment gains on the ground that the government can't gather this information under domestic tax law.

 

The government this year plans to end this " domestic interest " restriction on the data it can provide, a Finance Ministry spokesman said.

 

But even then, Singapore will be willing to investigate income that isn't taxed locally only if there are documented suspicions of tax evasion and proof the foreign authority requesting the information can't get it directly from the foreign investor or deposit-holder, according to people familiar with the situation.

 

The pressure on Singapore comes as U.S. and European authorities are broadening their attack beyond Switzerland, Luxembourg, Liechtenstein and Andorra. The tax regimes in those countries came under intense scrutiny at last month's summit of the Group of 20 industrial and developing powers.

Singapore found itself last month on an Organization for Economic Cooperation and Development " gray list " of 38 countries that have agreed to improve transparency standards but haven't followed through on their promises.

' Work to Do '

A French Finance Ministry official said Paris is focusing first on getting full compliance from European financial centers. But " as soon as that's done, there'll be surely some work to do " with other countries on the gray list, the official said. 

 

To comply with the OECD's new rules, Singapore will need to renegotiate many of its 60 tax-reporting agreements with other countries.

  

The U.S. must first establish a double-taxation agreement before it can get tax information on its citizens from Singapore -- which doesn't tax capital-gains or bank-account interest, among other things.

  

Singapore, a military ally of the U.S., is particularly sensitive to pleas from Washington.

  

" Frankly, Singapore believes it can withstand the pressure from the EU,"  said the person familiar the Singapore government's thinking. " But pressure from the U.S. is a different matter.Washington can push very hard, the way they did with UBS."

 

 

Swiss bank UBS AG, hit by a U.S. tax-fraud investigation into services it offered to hundreds of wealthy American clients, agreed in February to pay a $780 million fine and disclose the identity of some clients.

  

Hong Kong, another popular Asian destination for private-banking clients, is moving swiftly to avoid such a clash. Government officials said in February they would draw up legislation this year that would make Hong Kong's policies on sharing tax information adhere to international standards.

  

At least $300 billion of foreign cash is managed in Singapore, and that could double in the next five years, private bankers and wealth managers estimate. The vast majority of the money belongs to wealthy Indonesians, Malaysians, Chineseand other Asians.

  

Some 40 institutions in Singapore offer private banking, an industry that grew rapidly along with Asian wealth in 2005 and 2006. Singapore encouraged Western banks to expand here, promoting the city-state as a financial center through corporate tax cuts and other business-friendly measures.

 Alternate Shelter

 For now, Singapore appears to be benefiting as the spotlight on European havens has some investors seeking other shelters.

  

" At least $13 billion has landed here in the past few months, much more than the average of previous months, and a surprisingly high sum came from Europe,"  said a private banker in Singapore. " This money could be perfectly legal, but with the climate of fear in Europe many depositors want out. They want peace of mind."

  

Such inflows to Singapore might not last, however, especially when the U.S. turns its attention to the island's tax practices.

  

In 2007, then-Sen. Barack Obama cosponsored a bill to clamp down on tax havens, including Singapore, which is on a U.S." blacklist " of 34 " offshore secrecy jurisdictions."  The bill failed under the Bush administration, but a stronger version, backed by President Obama's administration, was introduced to Congress in March.

  

Write to:  Costas Paris at   costas.paris@dowjones.com 

A Trip to Tax Haven Heaven. India dodges.

 

John Cummings May 8th, 2009

 

President Obama loves to joke about a certain building in the Cayman Islands which, he says, is claimed by over 12,000 businesses as their headquarters: “Either this is the largest building in the world — or it’s the largest tax scam in the world.”

 

If you’ve ever wondered what the building looks like, here’s your chance to find out.

 

The strangely named Ugland House features in this video report on the celebrated Carribbean tax haven from, of all sources, Al Jazeera. The producers gleefully flash the names of some extremely large and well-known corporations across the screen, among them Deloitte, AIG, Lloyd’s TSB, JP Morgan, and KPMG. But if, like me, you’ve never been fortunate enough to visit a Caribbean island, you may find the clip just as interesting for its shots of the Caymanian capital, George Town, and its inhabitants as for its discussion of the Islands’ place in the global tax system.

 

If Mr. Obama has his way, the Caymans will likely become a less attractive place to keep your money. But they’ll surely still be a great place to go visit it.

http://bigfatfinanceblog.com/2009/05/08/a-trip-to-tax-haven-heaven/

 

India not keen on black money: Switzerland government

 

Ashish Mehrishi

 

 New Delhi,  May 8, 2009

 

The Swiss Justice Department on Friday said that the Government of India was dragging its feet on the black money issue.

In a Headlines Today exclusive,the department also said the Indian government had submitted forged documents to Swiss authorities in the $ 8-billion Hassan Ali money laundering case in January 2007. Stud farm owner Hassan Ali had illegally transferred $ 6 billion to UBS accounts and came under the Enforcement Directorate's radar.

Swiss government spokesman Folco Galli told Headlines Today that the Indian government was informed about the fake documents by Swiss authorities in January 2007 itself.Further, the Swiss claimed to have submitted certain queries to the Indian government in April 2007 but New Delhi has not bothered to file a reply even 24 months later.

Since the black money issue became a major election plank for the Lok Sabha polls, the Centre claimed in the Supreme Court that it has been doing what it can to bring back the black money stashed in Swiss banks. The Centre's affidavit in the SC however fails to mention that the Swiss have questioned the authenticity of the documents.

In fact, the Swiss spokesman's answer seems to suggest there has been little or no action from the government's side for the last two years in seriously pursuing the probe against Hassan Ali Khan.

The last sentence in the response of the Swiss is telling. Galli says, " India makes only few requests per year to Switzerland for legal aid in tracking down black money."

Given the black economy is considered much bigger than the Indian economy, the UPA government has a lot to answer for.

The Centre has been claiming that Swiss domestic laws don't allow them to access their bank accounts.

 

http://indiatoday.intoday.in/content_mail.php?option=com_content&name=print&id=40958

Public loot in tax havens: Hassan Ali, Adnan Khashoggi, 26/11 terror

“Congress shielding heavyweight”

New Delhi: Uttar Pradesh Chief Minister and Bahujan Samaj Party supremo Mayawati on Sunday alleged that the Congress was “covering up” the issue of black money stashed away in foreign banks as a party heavyweight and Minister in the UPA had “unaccounted money” in Swiss banks.

The BSP leader promised to enact the toughest possible law to bring back the unaccounted wealth if the BSP was voted to power at the Centre.

“Around Rs. 60,000 crore to 70,000 crore are lying in Swiss banks. But the Congress is sitting on it as it has to cover up a heavyweight Minister in the UPA whose unaccounted money is lying in Swiss banks,” she alleged.

Her accusations come a day after the government submitted an affidavit in the Supreme Court on the issue stating it had received information about Indian account holders in a German bank but did not reveal the names on grounds of “confidentiality.”

“The government has itself admitted in the affidavit that an amount of Rs. 72,000 crore is deposited in the bank in the name of a tout,” Ms. Mayawati said.

“One accused has been put behind bars and the apprehension that he could be killed to cover up the matter cannot be ruled out.” — PTI

http://www.thehindu.com/2009/05/04/stories/2009050459031000.htm 

Elements of an Inside Job in Mumbai Attacks

Terrorism

by Jeremy R. Hammond | December 22, 2008 - 11:14am

 

Published on The Smirking Chimp (http://www.smirkingchimp.com)

Indian police last week arrested Hassan Ali Khan, who was wanted for investigations into money laundering and other illicit activities, and who is also said to have ties to Dawood Ibrahim, the underworld kingpin who evidence indicates was the mastermind behind the terrorist attacks in Mumbai last month.

Ibrahim is also alleged to have close ties with both Pakistan's Inter-Service Intelligence (ISI) agency and the CIA.

Another character linked to the CIA whose name is now beginning to figure into the web of connections between the Mumbai attacks, criminal organizations, and intelligence agencies is Saudi arms dealer Adnan Khashoggi, of Iran-Contra infamy. Khashoggi has been implicated in arms deals with drug traffickers and terrorist groups, including within India.

Dawood Ibrahim is a known major drug trafficker whom India claims is being protected by Pakistan. As Foreign Policy Journal previously reported [1], there are also some indications that the CIA has a similar interest in preventing Ibrahim from being handed over to India. Ibrahim is wanted by India for the recent Mumbai attacks as well as for bombings that occurred there in 1993.

Ibrahim is a native of India who rose through the ranks of the criminal underworld in Bombay (now Mumbai). According to media reports in India, he got his start as an undercover informant for the police at a young age and thus has an intimate knowledge of Indian law enforcement and intelligence, and is alleged to have fostered close ties with individuals within the political system.

Another known associate of Ibrahim's in Mumbai, Mohammed Ali, is suspected of assisting the terrorists, who were met by an individual

in Uran [2] before continuing on to Mumbai, where inflatable rubber dinghies had been arranged to take them ashore by the same individual. Numerous earlier press accounts indicated that the dinghies, along with other logistical assistance, were provided by an associate of Ibrahim's.

The Times of India, for instance, reported [3] on November 28 that according to police sources the Mumbai attack "was enabled by the Dawood Ibrahim gang", and that "It would not have been possible to carry out a terror operation on this scale without a collaborative local network and this was provided by the D Gang. As the terrorists had entered via the sea, the needle of suspicion is clearly pointing at Mohammed Ali, the new poinstman of Dawood."

Yet Indian news reports indicate that officials have been slow to act against Hassan Ali Khan, and Mohammed Ali continues smuggling operations out of Mumbai for Ibrahim's crime syndicate, D-Company, completely unmolested by Indian investigators and law enforcement.

As the November 28 Times of India article observed, Ali "is known to indulge in smuggling of diesel, petroleum, naptha, drugs and arms with impunity and it appears that the terrorists had used his networks to enter the city by the sea route.... Despite having a detailed dossier on him, the authorities have not taken any action against him. What is more worrying is that Ali is believed to have also penetrated naval intelligence."

A further report [4] from the Times of India on December 4 noted that Dawood Ibrahim is "sitting pretty in Karachi" under the protection of Pakistan and his "hawala channel between Mumbai and Karachi remains busy". "But central agencies question why the Maharashtra government has not taken any action against the D-company here."

"'What's the point of asking Islamabad to hand over Dawood when we're not doing anything to destroy his empire in Mumbai and other places in India?' a senior official asked."

The article observed that Mohammed Ali "continues to operate with impunity.

Again, on December 11, Times of India reported [5] that "Mumbai police has still not called Ali for questioning", adding that "Ali is also known to have the backing of two powerful politicians of south Mumbai and that could be the reason why he is still untouched."

In addition to links to Ibrahim, both men are also alleged, like Ibrahim himself, to have ties to political officials in India, and there are numerous other indications emerging that the attacks were assisted by elements within India being protected by the political establishment.

Hassan Ali Khan

India's Daily News & Analysis reported [6] last week that it appears Hassan Ali Khan "was part of a multi-crore [Indian numerical unit equivalent to ten-millions] hawala syndicate racket and may have joined hands with the organized crime operated by underworld don Dawood Ibrahim. He is also suspected to have funded terror organizations."

India's Enforcement Directorate (ED) "had also told the Bombay High Court that there were indications that Ali was part of a strong international crime syndicate with money flowing in from 'proceeds of heinous crimes like terrorism, arms trade, gun running, corruption and organized forgery'."

A series of news reports from March 2007 in the Times of India revealed that Khan was being investigated for money laundering and other illicit activities. A laptop recovered from his home showed that he had accounts at a Swiss bank. Khan had reportedly tried to take advantage of tax waivers granted on investments originating outside India in countries with double taxation avoidance agreements with India. The funds were also be used to invest in the stock market.

Khan would send funds abroad through illegal channels and re-route them into India through shell companies in countries with such a tax arrangement with India. According to [7] the Times of India, "Khan has no known sources of income in India but owns stud farms and often travels abroad." His wealth is estimated to be in the billions, and he owns property in Mumbai and Pune.

Investigators from the Enforcement Directorate (ED) "had crucial input from the Intelligence Bureau, which was concerned about this unaccounted money having implications for national security."

One of the countries used to route money back into India was Mauritius, an island chain off the east coast of Africa near Madagascar and a former British colony. The UK still maintains a military presence there. It expelled the inhabitants of the island of Diego Garcia in order to turn it into a military base, which has also been used by the US for its own military operations.

According to reports, prior to the terrorist attacks in Mumbai, a team had been sent ahead and checked into the Taj Mahal hotel, one of the key targets of the attacks, and established a control room where they had food, weapons, and other supplies waiting in anticipation of the siege of the hotel by police and special forces. An identification card from Mauritius was used to check into the room.

Hassan Ali Khan has an interest in horse-racing and trades in thoroughbreds. The Times of India reported [8] that "he had attracted attention on the Pune racing turf where he surfaced about five years ago as a small-time punter who suddenly became one of the biggest players. His contacts, by default, were with some of the top industrialists who have an interest in horse-trading."

Last February, the Hindustan Times reported [9] that the Swiss bank involved in the money transfers, USB (United Bank of Switzerland) AG, was reluctant to assist Indian investigators, and the investigation had been stalled as a result. The ED had advised the Indian government not to approve a plan by UBS AG to buy Standard Chartered Bank, an Indian mutual fund business, because of its lack of cooperation in tracking Khan's money transfers. According to the ED, Khan had $8 billion in the bank's accounts.

Adnan Khashoggi

The Hindustan Times also revealed that there was evidence that Saudi arms dealer Adnan Khashoggi of Iran-Contra infamy had transferred $300 million to Khan from a Chase Manhattan bank account in New York. It added that Khashoggi's "arms supplies to Tamil terrorists, the LTTE, were revealed during an investigation into the 1991 assassination of Rajiv Gandhi."

Khashoggi acted as a middle-man during the Iran-Contra affair, brokering an arrangement for Israel to sell US arms from its own stockpiles to Iran. The CIA then channeled money from the sales to the Contras in support of their terrorist war against the democratically-elected government of Nicaragua. The World Court later condemned the United States for the "unlawful use of force" - a euphemism for international terrorism or the even greater crime of a war of aggression.

Investigative journalist Wayne Madsen recently reported [10] that, according to Asian intelligence sources, Khashoggi was also involved with the CIA in an effort to support Bosnian Muslims that "brought [Dawood] Ibrahim and [Osama] Bin Laden into the same big CIA tent, along with Saudi arms dealer Adnan Khashoggi, a key Iran-contra figure in George H. W. Bush's global arms smuggling venture while he served as Vice President under Ronald Reagan. There have been reports that Ibrahim considers Khashoggi to be a hero figure."

In 1991, a Defense Intelligence Agency report [11] listed Khashoggi as "An international arms trafficker who allegedly has sold arms to the Colombian drug traffickers, especially to the Medellin Cartel."

The Global Drug Trade

The DIA report also listed Washington's man in Columbia, Alvaro Uribe Velez, as "A Colombian politician and senator dedicated to collaboration with the Medillin Cartel at high government levels. Uribe was linked to a business involved in narcotics activities in the US.... Uribe has worked for the Medillin Cartel and is a close personal friend of Pablo Escobar Gaviria."

Uribe is now the President of Colombia, which receives enormous amounts of US financing and military support, surpassed perhaps only by US support for Israel, Egypt, and now Iraq.

Manuel Noriega was another infamous narcotics trafficker and CIA asset, as well as a graduate of the School of Americas (SOA), which has since changed its name to the Western Hemisphere Institute for Security Cooperation (WHINSEC). The SOA was responsible for training numerous Latin American dictators and military commanders who were responsible for torturing, murdering, or otherwise "disappearing" countless political opponents and other individuals.

Colombia is also another case where the government has been caught red-handed staging false-flag terrorist attacks. In the late 1970s, a series of bombings, kidnappings, and assassinations against leftist targets was carried out by a terrorist group known as the American Anti-Communist Alliance (AAA or Triple-A). Documents available online [12] at the George Washington University National Security Archives confirm that Triple-A "was secretly created and staffed by members of Colombian military intelligence in a plan authorized by then-army commander Gen. Jorge Robledo Pulido."

John Perkins, author of Confessions of an Economic Hitman, wrote in his follow-up book The Secret History of the American Empire that a second lieutenant in the US army sent to Colombia to establish a "United States-commanded Southern Unified Army" told him, "Everything we do in Colombia just makes it more attractive for the drug business. Why do you think the situation keeps getting worse there? Because we want it to, we're behind the drug trafficking. The CIA is--just like it was in Asia's Golden Triangle."

One might add the "Golden Crescent" to that list. As Foreign Policy Journal previously reported [13], Dawood Ibrahim "is known to be a major drug trafficker responsible for shipping narcotics into the United Kingdom and Western Europe." While most Afghan opium is smuggled to Europe over land through Iran and Turkey, much of the amount that goes to Pakistan seems to be taken either by plane or by ship directly to the Europe, principally the UK.

While Pakistan claims Ibrahim is not even in the country, India insists he has been living in Karachi under the protection of Pakistan's Inter-Services Intelligence (ISI) agency.

The ISI worked closely with the CIA during the Soviet-Afghan war and acted as the CIA's intermediary to provide funding, weapons, and training to the Afghan mujahedeen. The opium trade was used to finance the CIA-backed mujahedeen, and the principle beneficiary of CIA support was Gulbaddin Hekmatyar, who was also a principle drug lord.

And while Western media accounts [14] typically tend to characterize today's opium trade as being under the control of the Taliban, the fact is that the estimated amount of funds going to the Taliban and all other anti-government elements combined is less than 14 percent of the total estimated export value, and US intelligence agencies are aware of the involvement [15] of high-level officials within the Afghanistan government in the drug trade, such as Rashid Abdul Dostum, former Chief of Staff to the Commander-in-Chief of the Afghan Armed Forces. Dostum was also among the warlords of the Northern Alliance the CIA doled out suitcases of cash to during the initial phase of the US war to overthrow the Taliban.

Viktor Ivanov, the director of Russia's federal anti-narcotics service, said in an interview [16] recently that "The gathered inputs testify that infamous regional drug baron Dawood Ibrahim had provided his logistics network for preparing and carrying out the Mumbai terror attacks by the militants." He added that "The super profits of the narco-mafia through Afghan heroin trafficking have become a powerful source of financing organized crime and terrorist networks, destabilizing the political systems, including in Central Asia and Caucasus."

A Protected Man in India

The $300 million transfer to Hassan Ali Khan from Adnan Khashoggi was "only the tip of the iceberg", an official from ED told the Hindustan Times. There was also evidence of another $290 million, for instance, in two shell companies in the British Virgin Islands. This was among the evidence obtained from the laptop computer seized from Khan's home in Pune.

In addition to the money transfers, the ED was investigating Khan's possession of three Indian passports. He held passports issued from Pune, Patna, and Mumbai, and had also applied for additional passports from Guwahati and Chandigarh. He and his wife had applied for citizenship in Switzerland.

But it wasn't only the Swiss bank's apparent unwillingness to cooperate with Indian investigators that was slowing progress in the inquiry into Khan's dealings. The Times of India reported [17] in February that although the Prevention of Money Laundering Act provided for his arrest, the ED had yet to do so. The ED was "acting cautiously in this case, sources said." The paper added that "It is shocking that Khan could have concealed all that money without Indian agencies getting to know of it."

The report says that "The lack of evidence on the transactions seems to have prevented ED from arresting Khan", while at the same time noting that "The alleged presence of names of Indian politicians also found from Khan's initial questioning by the income tax and ED officials immediately after the raid last year, don't figure anywhere in the submissions made by the ED to the HC [High Court]. The Income tax department has failed to get information from the ED on the sources of the $8 bn, despite asking for it again and again."

In September, the Times of India reported [18] that the intelligence community was "seething with anger for being blamed by politicians for its 'failure' to prevent" a series of bombings across the country. A senior intelligence official responded to the charges by telling the Times of India that it was the politicians who were at fault, and connected Khan to investigations of terrorism.

"Take the case of Hassan Ali, the Pune-based businessman," he said. "He was under the scanner of several Central agencies, including the Intelligence Bureau, Enforcement Directorate, Directorate of Revenue Intelligence and other bodies. Finally it was found that he had handled hawala transactions valued at a mind-numbing Rs 35,000 crore through Swiss banks."

Hawala is an informal money transfer system that is an alternative to formal banking institutions. Often, relatively little money actually exchanges hands between hawala brokers, who operate on an honor system. An amount deposited with one broker is not actually moved to another broker on the receiving end. Rather, that amount is simply taken from the receiving broker's own reserves. The only funds that actually need be transferred are those used to offset imbalances between brokers, and there is no record of the transaction between the sender of the funds and the beneficiary.

The hawala system is thus ideal for moving illicit funds and for money laundering. According to a World Bank report [19], "The bulk of drug-related financial flows within Afghanistan, and also to and from neighboring countries (primarily Pakistan), occur through the ubiquitous hawala (informal financial transfer) system."

The report also notes that "Dubai appears to be a central clearing point for international hawala activities, and various cities in Pakistan also are major transaction centers." Dubai is a central location for the financial operations of Dawood Ibrahim's D-Company.

The September article from the Times of India continued, "The bank accounts were traced and he [Khan] was brought in for interrogation. How was it possible for a businessman to have access to so much cash, was the question on everyone's mind. The probe was stymied midway by vested interests with political clout. Ali has done the vanishing act. His wife and brother-in-law too are missing. 'Why was he allowed to go scot free?' asked an IPS [Indian Police Service] officer.

"Sources said there was no evidence of any concrete link between Ali and terror funds. 'Nevertheless, why was he taken off the hook? In any other country, he would have been put through the grind given the volume of his transactions. But in India he has been treated with kid gloves because of the political backing that he enjoys,' another official said.

"In another case, the Mumbai crime branch had gathered evidence about the alleged links between a famous Pune businessman and Pakistan-based brother of don Dawood Ibrahim, Anees Ibrahim.

"An eyewitness gave a detailed account of the goings-on between the businessman and Hamid Antulay, Dawood's nephew in Dubai, and later between the trader and Anees in Karachi. However, the businessman has not been arrested despite the disclosures made more than a year ago. 'We are expected to fight crime, but politicians do not give us a free hand,' a crime branch officer complained."

Mohammed Ali

The Times of India also noted that "Dawood Ibrahim's key contact person is Mohammed Ali, who is known to control smuggling operations in city docks. 'Any consignment can be taken out or brought into the country by Ali's huge gang. A detailed dossier on his activities, which has serious security implications for the country, has been sent to the Union home department. But there has been no response so far,' an official said."

Mohammed Ali also seems to be a protected person in India. Just days after the Mumbai terrorist attacks, the Times of India stated that Mumbai residents "now know their government has done nothing at all to protect the country's financial capital", and again noted that "The Intelligence Bureau (IB) has sent a detailed dossier about the activities of one Mohammed Ali, who is the uncrowned king of the docks. A close aide of Karachi-based terrorist Dawood Ibrahim, Ali smuggles petrol, diesel, drugs, arms and other contraband with impunity."

"There are strong indications," the Times of India added, "that the D-gang actively collaborated with the terrorists in these attacks. And yet, the government is reluctant to move against Ali and his gang because he enjoys the patronage of a powerful politician, known to be a business partner of Dawood."

The article adds, however, that "Any terror operations needs vast funds, via the hawala route. But the authorities are still to crack down on hawala operators. Recently, they picked up Hasan Ali, a racehorse owner in Pune.

"A joint probe by the IB [Intelligence Bureau], enforcement directorate [ED] and directorate of revenue intelligence revealed that Hasan Ali had handled hawala transactions worth a whopping Rs 35,000 crore, much of it belonging to two Maharashtra politicians."

A police officer told the Times of India at the time, before his recent arrest and while he was still missing, "I will not be surprised if Hasan Ali has been done away with. He is the man who knows too much."

Hemant Karkare and False Flag Terror

Maharashtra Anti Terrorism Squad (ATS) chief Hemant Karkare, who also formerly an officer in India's Research Analysis Wing (RAW) intelligence agency, had been in the spotlight for leading the investigation into a series of bombings in the town of Malegaon that was originally blamed on Pakistani-based Muslim terrorists. But Karkare's probe revealed that the perpetrators were in fact Hindu extremists. Included in the arrests was a serving army officer, Lt. Col. Prasad Shrikant Purohit.

The revelations of false-flag terrorism being carried out by home-grown elements sent shock waves through the political establishment.

As the Independent reported [20] on November 23, just days before the attacks on Mumbai, "Bomb attacks are not uncommon in India - there has been a flurry in recent months - but police usually blame them on Muslim extremists, often said to have links to militant groups based in either Pakistan or Bangladesh. As a result, the recent cracking of the alleged Hindu cell has forced India to face some difficult issues. A country that prides itself on purported religious and cultural toleration - an ambition that in reality often falls short - has been made to ask itself how this cell could operate for so long. India's military, which prides itself on its professionalism, has been forced to order an embarrassing inquiry.

"The near-daily drip of revelations from police has also caused red faces for India's main political opposition, the Hindu nationalist Bharatiya Janata Party (BJP), ahead of state polls and a general election scheduled for early next year. The BJP and its prime ministerial candidate, Lal Krishna Advani, have long accused the Congress Party-led government of being soft on terrorism that involved Muslims. However, the BJP has refused to call for a clampdown on Hindu groups, and last week Mr Advani even criticized the police over the way they questioned one of the alleged cell members..."

Karkare was put under immense political pressure and was heavily criticized by Hindutva (Hindu nationalist) leaders and members of the BJP. He had received a number of death threats as a result of his investigation, including a threatening call just one day prior to the attacks in Mumbai last month.

Karkare was killed during those attacks. Rumors with far-reaching implications began to spread immediately that he had been deliberately targeted.

Images of Karkare putting on an ill-fitted bullet proof vest just before his death were widely shown on Indian television.Indian Express noted [21], "His last visuals as seen on TV showed him working with his men near the VT station [Victoria Terminus, the former name of the Chatrapati Shivaji central train station], the target of one of the attacks, although it is perplexing at this point in time why such a senior officer ended up getting exposed to a brazen terrorist attack. Initially, he was shown wearing a shoddy helmet normally seen used by constables during riots. A little later, a policeman lowers a flimsy bulletproof vest over his shoulders, one that was obviously of little protection when those fatal shots were fired at him."

According to [22] the Pakistan Daily Mail, Karkare and several of his colleagues "had received information that their colleague Sadanand Dutt had been injured in the gunfire at the Cama and Albless Hospital for women and children." As they were driving their truck to the scene, according to the only police officer to survive that attack, Arun Jadhav, "two terrorists stepped out from behind a tree and opened fire with automatic rifles".

The Daily Mail article implicated Hindutva elements and Indian intelligence in terrorist attacks, stating that Bal Thakeray, the leader of Shiv Sena, a Hindu nationalist party, has "publicly pronounced in the past to setup Hindu suicide squads to target Muslims in India and Pakistan", and claiming that "The terrorist activities and training needs of these groups are closely coordinated by the Indian intelligence agencies, particularly RAW", which "trained the Tamil separatists groups of Sri Lanka such as the Liberation Tigers of Tamil Elam (LTTE) to start [a] militant secessionist movement based on terrorism in the Sri Lanka's Jaffna peninsula."

A government investigation into the assassination of Prime Minister Rajiv Gandhi, the Jain Commission, in fact confirmed[23] that "The LTTE was getting its supplies, including arms, ammunition, explosives, fuel and other essential items for its war in northern Sri Lanka against the Indian Peace Keeping Force from Tamil Nadu. That too with the support of the Tamil Nadu government and the connivance of the law enforcement authorities."

As noted previously, the investigation found that Adnan Khoshoggi had dealt arms to the LTTE. The commission's report also noted that LTTE's involvement in arms smuggling and other illicit activities "were tolerated" and that a number of murders demonstrated the "impunity with which the LTTE could operate in India."

Earlier this week, Amin Solkar, a lawyer in Mumbai, pressed the High Court to launch an independent investigation into the circumstances under which Karkare was killed. According to [24] India Today, "The Muslims in Malegaon have always claimed Karkare was killed by Hindutva militants and not by Qasab."

"Qasab" is an alternate spelling for "Kasab", a reference to Azam Amir Kasab, the only terrorist from last month's attacks to be captured alive. A transcript of his confession to interrogators was leaked to the media and contains the following statements: "When we were coming out of the hospital premises, we suddenly saw one police vehicle passing in front of us. Therefore, we took shelter behind a bush.

"Another vehicle passed in front of us and stopped at some distance. One police officer got down from the said vehicle and started firing at us. One bullet hit my hand and my AK-47 dropped down. I bent to pick it up when second bullet hit me on the same hand. I got injured. Ismail opened fire at the officers who were in said vehicle. They got injured and firing from their side stopped." Kasab and his companion, Ismail, then removed the bodies of three dead officers and apprehended the vehicle.

Assuming this incident is the one in which Karakare and his colleagues were killed, this characterization of events seems to cast doubt on the theory that the officials were deliberately targeted for assassination, set up and ambushed. But the Joint Commissioner of Police Rakesh Maria, who is in charge of the investigation into the attacks, Rakesh Maria, has rejected[25] the authenticity of the confession document.

Pakistan's The News reported [26] earlier this week that "A Pakistani lawyer C M Farooque claimed that many people, including Ajmal Kasab, were arrested before 2006 from Kathmandu by the Indian agencies with the help of Nepalese forces." Farooque said he was contacted by Kasab's parents and had filed a petition with the Nepalese Supreme Court with regard to the disappeared individuals last February. "The people arrested in Nepal," the report added, "had gone there on legal visa for business but Indian agencies were in the habit of capturing Pakistanis from Nepal and afterwards implicated them in the Mumbai-like incidents to malign Pakistan."

Kasab is from the Punjab province of Pakistan. Rakesh Maria said [27] last week that "He expressed his desire to write a letter to his parents. He wants to write the letter saying he was misled by the group."

More questions about the death of Hemant Karkare were raised [28] this week by Union Minority Affairs Minister A. R. Antulay, who also implied that he may have been deliberately targeted with the involvement of others. "Superficially speaking they [the terrorists] had no reason to kill Karkare. Whether he was a victim of terrorism or terrorism plus something I do not know," he told reporters.

"Karkare found that there are non-Muslims involved in the acts [of] terrorism during his investigations in some cases. Any person going to the roots of terror has always been the target." He added that "There is more than what meets the eye" with regard to Karkare's killing.

After coming under fire for his remarks, he responded [29] by asking, "How come instead of going to Hotel Taj or Oberai or even the Nariman House, he went to such a place where there was nothing compared to what happened in the three places?" He asked, "Why all the three (Hemant Karakre, Vijay Salaskar and Ashok Kamte) went together. It is beyond my comprehension."

He later defended his remarks further, asking, "Who had sent them to Cama Hospital? What were they told that made them leave for the same spot in the same vehicle?" He added, "I repeat what I had said. I had not said who had killed them but only questioned who had sent them there in that direction."

Rajiv Pratap Rudy, spokesman for the BJP party called the remarks "obnoxious" and called for a "clarification from the Prime Minister" whether this was a private view or one held by his government. Congress spokesman Abhishek Singhvi said, "we do not accept the innuendo and the aspersions cast" by Antulay's remarks. "This should be the end of the matter. The Congress does not agree with Antulay's statement."

Others were more inclined to take the remarks seriously. Union Minister Vilas Paswan noted that Antulay was from Maharashtra and suggested he must therefore have "more information".

Vijay Salaskar, who, as previously noted, was killed along with Karkare, "had closely investigated the entrenched links between a prominent gutka [a betel-nut and tobacco based product] manufacturer and the Dawood gang," The Times of India reported [30] in an editorial piece. "He had unearthed a mass of evidence about the manufacturer's visit to Dubai, where he met Hamid Antulay, a nephew of Dawood, and then went on a false Pakistani passport to Karachi where he met the don and his brother Anees. The purpose of the visit was to settle a business dispute with a rival.

"Salaskar found out that the manufacturer was Dawood's partner in the gutka business, alongside a leading politician who dabbles in real estate development. Despite Salaskar's best efforts, he was never allowed even to summon the manufacturer for questioning."

The editorial continued, "The details of Dawood's vast business transactions and the man fronting it are available with the Central government. But there is inaction. Is it any wonder the security agencies are deeply cynical about enforcing law and order and protecting the country? Is it any wonder the people are enraged?"

On December 6, Maharashtra's former revenue minister Narayan Rane alleged in a press conference that the terrorists who had attacked Mumbai the week before received "logistical and financial" support from a number of politicians. According to[31] the Press Trust of India, Rane also alleged that former chief minister Vilasrao Deshmukh had links with a person connected with fugitive gangster Dawood Ibrahim."

Indians Arrested in Connection with Attacks

Two Indians were also arrested in connection with the recent Mumbai attacks. One of the men, Tauseef Rahman, reportedly bought SIM cards that were used by the terrorists, which were purchased in Calcutta according to a report [32] from theAssociated Press. The other, Mukhtar Ahmed, was an undercover operative of for a special counter-insurgency unit of the Calcutta police force.

Another Indian citizen, Faheem Ansari, was arrested in February and is now being questioned about his possible involvement. According to the AP, he was found "carrying hand-drawn sketches of hotels, the train terminal and other sites that were later attacked". According to lead investigator Rakesh Maria, "Ansari was trained by Lashkar and sent to do reconnaissance."

India's top law enforcement official, Home Minister Palaniappan Chidambaram, apologized for failing to stop the attacks, saying "There have been lapses. I would be less than truthful if I said there had been no lapses."

In fact, as previously reported [33] by Foreign Policy Journal, Indian intelligence had numerous warnings of an imminent attack, both from its own sources and from the US. The warnings were specific, including that it would come from the sea. Mumbai, and even the Taj Mahal hotel, were identified as specific targets.

Additionally, Rakesh Maria said [34] his investigation was looking into the possible involvement of Riyaz Bhatkal, the leader of the Indian Mujahideen (IM), in the attacks. "We are looking at various possibilities about who could have provided vital local support and intelligence. Bhatkal being a local person is known to have links with terror outfits."

In October, Indian Express reported [35] that Bhatkal and a terrorist named "Shahrukh" might be the same individual. "Sources said that since his name was linked to the 1993 Mumbai blasts, Bhatkal may have used the name Shahrukh to protect his identity," the newspaper said. One official said, "For the 1993 blasts, he arranged money from Pakistan through hawala channels. But he could not be arrested." In addition, "Officials also suspect an underworld link to the blasts. 'Since Bhatkal's name came up in the Mumbai blasts, it is evident that he is an important financial link for the underworld,' said a source."

Whitewash of the Attacks

Foreign Policy Journal previously reported [36] on indications that the role of Dawood Ibrahim and his network of organized crime in the attacks in Mumbai last month is being downplayed by both Pakistan and the US and assessed that this was "possibly the result of a deal taking place behind the scenes between the governments of the US, Pakistan, and India, to have others involved in the Mumbai attacks turned over while quietly diverting attention from a man who some say could reveal embarrassing secrets about the CIA's involvement in criminal enterprises."

What's clear now, as further developments have come to light, is that there are also elements within India, both in the criminal underworld and the government, that are perfectly willing to see the role in the Mumbai attacks of an even larger shadowy international criminal network whitewashed; a network with links to numerous moneyed interests, including trafficking in drugs and arms, and to numerous intelligence agencies, including the ISI, the CIA, and India's own RAW.

While Dawood Ibrahim is officially a wanted man in the US and India, and is on Interpol's wanted list, the evidence emerging from last month's terrorist attacks in Mumbai is yet another indication that what is commonly referred to as a "shadow government" or "deep state" extending well beyond national boundaries is really pulling the strings behind the scenes in countries around the world, while the public--such as the residents of Mumbai--and well-intentioned individuals within their democratically-elected governments are left paying the price, often in blood.
_______

About author

Jeremy R. Hammond is the editor of Foreign Policy Journal [37], a website dedicated to providing news, critical analysis, and opinion commentary on U.S. foreign policy from outside of the standard framework offered by government officials and the mainstream corporate media, particularly with regard to the "war on terrorism" and events in the Middle East. He has also written for numerous other online publications. You can contact him by clicking here [38].

 

http://www.smirkingchimp.com/thread/19352

 

Hasan Ali located in Pune, summoned to police HQ

11 Mar 2007, 0140 hrs IST, Gitesh Shelke & Siddhartha D Kashyap , TNN

 

PUNE/HYDERABAD: The Pune police have asked stud farm owner Hasan Ali Khan, suspected to be involved in a massive money transfer racket, to present himself at the police commissioner’s office in the next two days. 

Inspector (crime) Bhanu Pratap Barge, who served a notice to Khan under Section 161 of the Code of Criminal Procedure (CrPC) on Saturday afternoon, said he had met Khan at a "discreet location" in Pune and given him the notice following orders from additional city police commissioner Rajender Singh. "I cannot disclose his whereabouts but he is very much in the city," he said. 

Section 161 of the CrPC refers to police examination of witnesses if they are suspected to be acquainted with the facts and circumstances of a case. Khan's lawyer Viraj Kakade said his client was very much within Pune limits and would make an appearance by Sunday or Monday. 

"He wanted to issue a statement on Saturday itself in connection with his alleged involvement in the money-laundering case but I restrained him," Kakade added. 

The I-T department had served a notice on Khan at his Mumbai residence on Friday. The notice was received by a representative of Anand Darshan building on Peddar Raod since Khan was absent. The contents of the notice are not known. 

Officials also said Khan's friend, Switzerland hotelier Philip Anandraj, was suspected to be the man who knew about his foreign transactions. But neither the I-T department nor Enforcement Directorate officials were willing to say if Anandraj's statement had also been recorded after Khan was questioned by them. Anandraj was in Khan's duplex flat when I-T personnel had raided the place in January. 

The 53-year-old Khan is under I-T investigation after Swiss bank account details were allegedly recovered from a laptop in his house. The probe was widened after the ED came in and other foreign accounts were also being investigated, officials said.

http://timesofindia.indiatimes.com/articleshow/msid-1746713,prtpage-1.cms

 Sent to judicial custody, Hasan Ali files bail plea

Express News Service Posted: Dec 24, 2008 at 0144 hrs

Mumbai Hasan Ali Khan, 56, the Pune-based stud farm owner who was arrested by the Worli police in a case of possessing multiple passports, was on Tuesday remanded to judicial custody till January 6, by the Bhoiwada metropolitan magistrates court.

Khan had been absconding for over a year. He had recently surrendered before the court.

Immediately after being sent to judicial custody, Khan moved a bail application before the court. The bail plea states that prima facie there is no case under the Passports Act against him, as Khan had submitted correct documents to the passport office, said his lawyer Iswariprasad Bagaria.

He said there was no headway in police investigations in the ten days of police custody and thus no further custodial interrogation was required.

The bail plea also states that Khan does not have anything further to disclose, as the Worli police and Enforcement Directorate (ED) probing his role for having huge funds in his international accounts had already seized all documents. Thus, no more seizures need to be made, the plea said.

The court has directed the prosecution to file its reply on Wednesday when the matter will come up for hearing. Meanwhile, the ED also moved an application before the court stating that if Khan is granted bail then he should be directed to attend its office as and when required for questioning.

ED has been probing Khan’s role under the Prevention of Money Laundering Act and Foreign Exchange Management Act. He is wanted by the ED for allegedly holding unaccounted money to the tune of US$ 8 billion in his Swiss bank accounts and some undisclosed accounts in the UAE. Authorities are investigating his financial transactions within and outside the country, including monetary dealings with international arms dealer Adnan Khashoggi.

Medication for Khan
The court has directed the jail authorities to allow Hassan Ali Khan to take medicines inside the prison. Khan is suffering from diabetes and chest pain and has to be on a regular medication.

http://www.expressindia.com/latest-news/sent-to-judicial-custody-hasan-ali-files-bail-plea/402246/

Downfall of NDA due to Swiss UBS, Hasan Ali and………

 

By - Premendra Agrawal (7 Feb. 2008)

 

It is now suspected in the political circles that there would be a conspiracy of Anti-NDA politicians, Swiss bank account holders’ economic offenders and underworld terrorists behind the downfall means defeat of NDA government.

 

The Securities and Exchange Board of India (SEBI) alleged that UBS had played a role in the 2004 Black Monday stock market crash which followed the National Democratic Alliance government’s defeat in the general elections. SEBI's ruling of May 17, 2005 barred UBS from issuing or renewing participatory notes for a period of one year. The ban was later lifted on appeal, as a result of a government tribunal ruling on September 9, 2005.

NDTV reports on Jan 31: Saudi links traced to Hasan Ali

Another report of NDTV on Jan 30: Hassan Ali likely to have terror links

Bofors villain Quattrocchi and Hawala Hasan Ali had/have Swiss accounts and they have link with the politicians as alleged.  

 Seized laptop of Hasan Ali is hided about the hawala transaction of minimum 30 politicians of various parties besides eight companies

 After combining all these facts, what is probable outcome?

Now UPA govt itself reports that former Deputy PM at the time of NDA govt L K Advani have life threat from the underworld Daud and others.

India blocks licence for UBS amid allegations of money-laundering

 Swiss UBS

In June the ministry’s enforcement directorate registered a case against Mr Hasal Ali Khan under India’s Prevention of Money Laundering Act.

Investigators claimed to have uncovered documents showing that Mr Khan, a man of apparently relatively modest means, held as much as $8 billion in illicit cash in accounts purportedly registered at a Zurich branch of UBS. Officials said that they had sought confirmation — or “direct evidence” — from UBS by writing to the Swiss authorities, a request at odds with Switzerland’s banking privacy laws. A spokesman for UBS said it was co-operating fully with the Indian authorities.

Mr Hasan Ali Khan, who could not be contacted on Feb 6, is said to have denied that he held a Swiss account.

India blocks license for UBS amid allegations of money-laundering

Hasan Ali shows our economic progress and Afzal denotes the security of minority-ism. MF Hussain is a symbol of the freedom of expression.  Is Advani not communal to attack Congress on Afzal issue?

 Hassan Ali likely to have terror links

NDTV reported on Jan 31 that the Hasan Ali story just got murkier with the Enforcement Directorate investigating Pune's billionaire horse breeder making a claim that he could have terror links.

These charges were leveled in an affidavit filed in the Bombay High Court by the Enforcement Directorate.

The charges follow the discovery of $8 billion stashed away by Ali in Swiss Bank accounts - money that is the centre of the country's biggest tax evasion scam. 

It's a scam, which ironically started as an investigation into a case of customs duty evasion amounting to a paltry in March last year.

But who exactly is Hasan Ali?

 HAWALA HASAN ON THE RUN

Hasan Ali is uptill now safe.  He is behind leaders as Arjun behind Shikhandi and Army of Hindu king’s enemy behind cows! Politicians-Eco bandits in laptop of Ali; Ganga dying, corrupt flooded; Bharatratna in future to Afzal…

When it comes to protecting foreign investment through Participatory Notes (PNs), even national security takes a back seat. These derivative instruments allow those who are otherwise ineligible to invest in the Indian stock market. The National Security Advisor recently claimed that terrorist groups were profiting from India’s powerful Bull Run by investing through non-transparent Participatory Notes (PNs). A little later, we were told of the stupendous wealth more than Rs 35,000 crores of Hasan Ali Khan, an alleged hawala operator based in Pune who had managed to fly under the evasion detection techniques of the tax department for several years.

 Rat cat run is going on

Later, former BJP parliamentarian Kirit Somaiya alleged that Hasan Ali Khan was linked to two Union ministers. But BJP, too, seems reluctant to follow up on this sensational allegation and has moved on to more routine protests against Special Economic Zones.

Runners of Italian instructed government are shrewd. They did one sin. Opposition makes sound against it. Then government makes other sin quickly and thus this rat cat run is going on. Why Media IT ED silent on Hawala Hasan Ali

Aswamegh Yagya: Rs 35000 cr of Pune’s Racehorse owner Hasan Ali is frozen in Swiss Bank; Swiss is heaven for Eco-criminals. Bil Clinton pardoned Bandit Mark Rich who was sentenced to 325 years. Hasan Ali of Rs 350 million in Swiss: Dung on wall? How did cow climb?

Recall the Quattrocchi a best friend of ’10 Jan Path’. Q is gift of Sonia Gandhi to India

Q ke saath, Congress ka haath

Instead of Rajiv Murder Secrets, PM seeks Swiss support for Nuke deal?

After studying Quattrocchi, Hasan Ali and so many other scams, who can say that our country had never been a ‘Sone ki chidiya’? But Chidamberam say like that. Burns Glorious Past of India: FM Chidambaram

TOI on Congress to FM: Take care of 'aam-aadmi'

  

E-mail: agrawapremendra@hotmail.com

 

http://www.newsanalysisindia.com/207022008.htm

 

Businessman Hasan Ali arrested in Mumbai in fake passport case

December 15th, 2008 - 10:01 pm ICT by IANS Mumbai, Dec 15 (IANS) Multi-millionaire Pune businessman and stud farm owner Hasan Ali was arrested and sent to jail till Dec 19 in connection with a fake passport case, the police said.An official of the Worli police station told IANS that Ali, who was declared a “proclaimed offender” by the Bhoiwada court in May this year, has been nabbed for holding three fake passports which were acquired from Mumbai, Hyderabad and Patna.

He had applied for two more passports from Chandigarh and Guwahati, following which a case was registered early 2008, the official said.

Shortly thereafter, Ali applied for anticipatory bail, which was rejected by the Bombay High Court.

Thereafter, he neither moved the Supreme Court nor surrendered, prompting the Worli police to approach Bhoiwada court to declare him a proclaimed offender, which would enable the police to seize his property after the court’s permission.

To avoid this, the proclaimed offender must surrender to the police and face the charges.

Ali (55) was also on the watch-list of the Enforcement Directorate (ED) for alleged involvement in a Rs.100 billion ‘hawala’ (illicit money transfer) scam. It registered a case against Ali in January 2007.

Ali was also under the scanner of the Mumbai Police, Income Tax department, Securities & Exchange Board of India (SEBI), the Reserve Bank of India (RBI) and Ministry of External Affairs (MEA) through its passport offices in different cities.

http://www.thaindian.com/newsportal/uncategorized/businessman-hasan-ali-arrested-in-mumbai-in-fake-passport-case_100131306.html

 

Hyderabad police distance themselves from Hasan Ali

Syed Amin Jafri of Hyderabad | March 13, 2007 | 15:43 IST

The Hyderabad police seem to have washed their hands of Syed Hasan Ali Khan alias Hasan Ali, the 53-year-old stud farm owner allegedly involved in a mega-crore money-laundering scam, by claiming that all the seven criminal cases pertaining to him have been disposed of by the courts.

Hyderabad Police Commissioner Balwinder Singh and Additional Commissioner of Police (Crimes) told newsmen on Monday that two cases of bank fraud, four cases of cheating and a case of acid attack on a doctor were lodged against Hasan Ali in various police stations.

"No case is pending against him as all the previous cases were disposed of by the courts," they pointed out.

According to senior police officials, in 1990, the manager of State Bank of India, Charminar branch, had lodged a complaint stating that Hasan Ali had fraudulently withdrawn a total of Rs 26 lakh on three occasions against cheques that later bounced. A similar case was lodged for defrauding the Grindlays Bank.

In September 1991, the central government had announced an amnesty scheme wherein it allowed Indian citizens to get foreign exchange from outside. Subsequently at least four persons approached Hasan Ali, who promised them demand drafts in dollars.

He had allegedly collected Rs 10.35 lakh from Suresh Mehta, Rs 6.29 lakh from Rajesh Gupta, Rs 36 lakh from T Ramnath and Rs 18.22 lakh from P Rama Koteswara Rao.

He then produced 'international money orders' and handed over demand drafts to them to encash the dollars. However, the customers found the DDs to be fake and lodged complaints with the police in 1992.

The Hyderabad City police had arrested Hasan Ali twice between 1991 and 1992, once for allegedly cheating the State Bank of Hyderabad and the next time for duping private persons.

The city police had caught him in 1991 with the help of Interpol and the Canadian police for cheating the SBH. On the pretext that his mother was ill in Toronto, he had fled to Canada after a case was registered against him.

The Hyderabad police had alerted Interpol about Hasan Ali and they informed the Toronto police who arrested him and brought him to Mumbai, after which he was taken to Hyderabad. Subsequently, he was acquitted.

He is said to have been picked up by the police from Mumbai again in 1992, brought to Hyderabad and remanded to judicial custody in one of these cheating cases. The police had seized four cars, including a Mercedes, from him. He went free, however, since the victims did not come forward to pursue the cases against him.

The oldest case against Hasan Ali pertained to an acid attack on a doctor, his neighbour, in 1984. Dr P Niranjan Rao's face was disfigured and he had to undergo 30 surgeries. Since the police could not trace the records relating to the case, it is not clear whether Hasan Ali was arrested and acquitted in this case.

Hailing from a Hyderabadi family based at Musheerabad, Hasan Ali has a brother and four sisters. He married Mahboobunnissa Begum in 1985 but divorced her in 1999. Mahboobunnissa now lives with her two sons at Banjara Hills in Hyderabad.

http://www.rediff.com///news/2007/mar/13ali.htm

 

UPA has failed to provide critical information to the Supreme Court on public loot in tax havens

Why was this critical fact hidden from the affidavit submitted to Supreme Court, that UPA Govt. had sent forged documents to Switzerland?

Something is rotten in the state.

Kalyanaraman

“No response to Swiss request”

Vinay Kumar (The Hindu, 8 May 2005)

NEW DELHI: Swiss authorities have told an Indian news magazine that Indian authorities submitted in the case of Pune-based stud farm owner Hassan Ali Khan, who has a Swiss bank account, a request in January 2007 for legal assistance to the Federal Office of Justice. Swiss authorities, upon domestic inquiry, found that the banking information provided with the request for legal assistance contained “forged documents.”

Last week, the Centre, in an affidavit to the Supreme Court, had detailed the action it had taken against Hassan Ali Khan, his wife Rheema and Kolkata-based businessman, Kashi Nath Tapuria, who allegedly were holding about $ 8 billion in an UBS account in Switzerland.

In a communication from Folco Galli, Information Chief of the Swiss Department of Justice and Police, Berne, the magazine Hardnews was informed that the Indian authorities had submitted “forged” documents to seek assistance in the Hassan Ali Khan case. In its May issue, the magazine said the Swiss sought more information.

“Swiss authorities want to provide further assistance in that case if the Indian authorities could satisfy the Swiss government’s demand to establish dual criminality – what is crime in India is a crime in Switzerland. The Swiss also wanted to know whether the offence was an object of Indian money laundering. Since April 2007, the Indian government has not responded.”

http://www.thehindu.com/2009/05/08/stories/2009050861061300.htm

It’s the Bofors ghost, again 

 

By Seema Mustafa 
06 May 2009 03:27:00 AM IST

(New Indian Express)

Bofors is a story that will just not go away. It cannot for reasons that Congress president Sonia Gandhi cannot fathom. And the reasons are many. It was the first case where kickbacks in a defence deal were confirmed. It was the first case that the Indian media pursued in great detail, and with tremendous enthusiasm.
It was the first case that actually established a trail between middlemen, high flying ‘foreign’ connections and the Nehru- Gandhi First Family of India. It was the first case that brought down a government, that astounded not just the middle class but also the villagers, and that assumed a dynamics of its own that is still able to generate heat during an Indian election.
It is a story where the middlemen might be dead but the Italian businessman Ottavio Quattrocchi, a close friend of Sonia Gandhi, is alive and kicking. During his days in Delhi he told this columnist on more than one occasion that he was not really such a good friend of Sonia Gandhi, at a time when his was one of the few names to have been cleared for free entry into then Prime Minister Rajiv Gandhi’s residence. Quattrocchi has subsequently changed his tune, and now when he is actually not such a good friend of Sonia Gandhi, he makes it clear to any reporter who manages to meet him abroad that they are great friends, and know each other extremely well. Obviously, in saying so the wily Italian businessman has managed to make it clear that he knows a lot more than he is saying, and that if the Indian government does manage to get his head into the noose, he will talk. And talk happily.
Quattrocchi was the representative of Snamprogetti in India before Rajiv Gandhi became prime minister. He used to operate from a one-room office, where this columnist met him a couple of times. He was not particularly a happening person in Delhi, but fortunes changed for him when they changed for Rajiv and Sonia Gandhi. The coincidence can be tracked, and actually was tracked at the time by us in various sections of the media. Quattrocchi’s business bloomed, he moved into a posh office, he put on weight, light weight suits, and was recognised in Delhi’s exclusive circles as a happening man, with access and clout.
His area of influence extended outside his company, and covered many deals that are now only whispered about.
In an extensive interview with this columnist in 2004 Sten Lindstrom, the Swedish police officer who had doggedly pursued the Bofors case until time made him close the file because of strict Swedish laws, made it clear that Mr Q was a recipient of a certain amount of money from the Bofors deal. He said that this was not large enough to merit suspicion that Quattrocchi had a direct hand in this particular transaction, but appeared to be a fee being paid through Bofors for other favours done. He said that during his investigation the Italian businessman’s name cropped up only towards the end, and after questioning the Bofors officials concerned, Lindstrom reached the conclusion that Quattrocchi was a recipient because of his powerful connections. He spoke of the businessman’s accounts in London, having gone there himself to pursue these and establish the trail back to the Bofors kickbacks.
Lindstrom had made significant progress, and was surprised that the Indian authorities were not particularly interested in any of the details, and had just allowed the matter to lapse. He felt that the trail was strong enough to get the surviving beneficiaries of the Bofors kickbacks, and was amazed at the lack of enthusiasm from Delhi. Lindstrom gave specific details about the deal, but such was the atmosphere when the serialised story was broken by us that the Congress, Left and their supporters in and out of government united to try and shoot the messenger rather than take the powerful message coming out of Stockholm, with amazing details, on board.
The result is that in the intervening years the CBI was unable to collect evidence, although it is available in plenty, to pin Quattrocchi down in courts abroad; he himself evaded the law and the supposedly vigilant Indian machinery to get back to Italy; his accounts in London that had been frozen as these could establish the trail to the kickbacks were released as the Indian government sat back and deliberately let the reminders lapse; the money was withdrawn by him almost immediately; and then when he was arrested by Argentina under an Interpol notice issued at the time of the Bofors case, the government ensured that the case was completely botched up and Quattrocchi was able to walk out a free man. And now to complete the circle, on the eve of the elections the CBI, under instructions, has withdrawn the Interpol notice against him and the Italian friend of Sonia Gandhi is a free man. This has been done during the elections, after it has become increasingly clear that the Congress might not be able to form the government.
And everyone knows that in case a government here is able to get Mr Q to justice he will squeal. And that could be worrisome for some.
The BJP has made some valiant noises on the deal but has not been able to explain why it did not pursue the case with the same vigour as the V P Singh government had. The Congress has been defending the decision on the record, but privately Congressmen tell critical reporters, “what do you expect us to do, we have to defend this or we will lose our job”. Of course Priyanka Vadra and Rahul Gandhi do not see what the fuss is about, but obviously they know the answer for if there is no need to fuss, there was no need to prime the CBI to save the Italian businessman. It has been a shameful deed, a gross violation of the law, and while there is sufficient information to damn the CBI, the fingers are now pointing very directly at those who are in power and in control. Prime Minister Manmohan Singh is amongst those responsible. He makes a penchant of honesty; this is the time for him to explain these murky developments.
Clearly there are problems, and Bofors will not go away from media memory just because the Nehru-Gandhi family wishes it so. They should also realise that by misusing the official machinery to save Quattrocchi from the long arm of the law, over and over again, guilt and not innocence has been established. And in the public perception this is enough to keep the Bofors ghost alive. And the favourite pastime of ghosts, as we know, is to haunt.
About the author:
Seema Mustafa
 is a commentator on political affairs

http://www.expressbuzz.com/edition/print.aspx?artid=dNwmL1d0wiI=

Black money: Why was UPA Govt keeping mum all these years?

 M.V.KAMATH  (Free Press Journal, 8 May 2009)

 [ Why has the UPA government been keeping quiet all these years? It would seem that throughout the Nehruvian socialistic period, underinvoicing of exports and overinvoicing of imports was very common and the monies thus illegally raised was put in safe custodies of banks in Antigua, Switzerland, Bahamas, Lichtenstein, Isle of Man, St. Kitts etc. ]

 For some weeks now, L.K Advani has been proclaiming that if the BJP-led NDA coalition comes back to power, it would facilitate the recovery of black money stashed by many Indians in tax free havens abroad, hopefully within a hundred days.

 According to one estimate, the illegal money secreted abroad in tax havens varies between $ 500 million to $ 1.4 trillion! That is equivalent to Rs 70 lakh crore which is more than India’s national income of around Rs 50 lakh crore! Who are these people who have been cheating India for years now?

 

 They include importers and exporters, industrialists, people who have received kickbacks from major defence and civilian contracts, and even cinema and sports stars. According toR.Vaidyanathan, Professor of Finance and Control, Indian Institute of Management, Bangalore whose report in the April issue of Eternal India is an eye-opener, India should join hands with different world bodies, including the G-20, to recover the money. It can be done according to one source easily.

  

Apparently the German Government has announced that it would share information on accounts held in tax havens, with any government that wanted it.

 

 Mr. Vaidyanathan, who can be contacted at vaidya@iimb.ernet.in

quotes the spokesman for the German Finance Ministry, Thorsten Albig, as indicating that they would respond to such requests without charging any fees for the information.

 

 Why has the UPA government been keeping quiet all these years? It would seem that throughout the Nehruvian socialistic period, underinvoicing of exports and overinvoicing of imports was very common and the monies thus illegally raised was put in safe custodies of banks in Antigua, Switzerland, Bahamas, Lichtenstein, Isle of Man, St. Kitts etc.

  

Foreign tax havens can be forced to reveal the origins and nature of illegal accounts they have been holding. It would seem that under pressure from the U.S.Federal authorities, a wellknown Swiss bank, known as UBS, has closed down hidden offshore accounts of its well heeled American clients, potentially allowing their secrets to spill out into the open. UBS will be shutting down 19,000 accounts that prosecutors suspect have gone undeclared to Americas Internal Revenue Service.

  

Incidentally, the UBS reportedly paid a penalty of over $ 800 million to the U.S., disclosing the secret accounts of three hundred American depositors.Writes Vaidyanathan: “ But in India, the same UBS paid a paltry penalty of a few lakh rupees to the Securities & Exchange Board of India (SBI) for not disclosing the names of secret P.N. holders whose funds it had invested, and settled the case just a couple of weeks back”. P.N.stands forParticipatory Notes.

  

The PNs are preferred instruments of investment. The money invested in India through PNs between 1994 and 2004 was of the order of Rs 3,53,484 crores by August 2007, an increase by over 11 times in 40 months.

 

 The investors are all nameless.

  

They participate in our markets invest and disinvest stocks worth billions of dollars and make and repatriate profits. And no questions asked.Indeed, according to Vaidyanathan, India has shown marked disinclination to lay its hands on the data pertaining to illicit money kept by Indian nationals in secret bank accounts, and to strive to get back the Indian wealth hoarded in Swiss and other banks. Vaidyanathan makes the charge that while things are moving fast and the very western nations which once encouraged the Swiss Bank’s secrecy are now against secret banking, `the Indian representative at the G-20 preparatory meeting in Berlin did not utter any word of support for the move.’

 

 Prime Minister Dr. Manmohan Singh owes an explanation to the Indian people. Vaidyanathan adds: “If India joins hands with the Organisation for Economic Cooperation and Development (OECD) and G-20 nations and a deal comes through between the G-20 and different tax havens, particularly Switzerland, the process to recover Indian monies can be much shorter and hugely successful.”

 

And if it becomes successful, Indian Foreign Exchange Reserves will get a tremendous boost; India can then really compete with China whose reserves are ten times that ofIndia. But more importantly, the money will facilitate infrastructural development.

 

 According to Mr. Pranab Mukherjee, it is not true that the UPA government has not given thought to the issue. According to him, the government has been mounting pressure on the Financial Action Task Force (FATF) and other similar regional bodies under its umbrella like Asia Pacific Group on Money-Laundering and Counter-Financing of terrorism.

 

 He also said that after amendments to the Prevention of Money Laundering Act were passed by Parliament last February, the matter was taken up at the FATF plenary held in Paris, where they have agreed to mutual evaluation which was pre-requisite for granting Indian membership of the body.

 

 Mukherjee hopes that India would get the Membership soon, after which it would be easier to handle tax evaders.

 

 What is surprising is that though tax evasion had started during the Nehru era, it has taken the Congress Party six decades to wake up. It doesn’t speak highly of the Congress. Was it lethargy, was it forgetfulness or was it deliberate? What is shocking to learn is the casual way in which Indians at many economic levels and from various segments of lifehave been making free use of Swiss banks for stashing money. Vaidyanathan estimates that `at least’60,000 Indians visit Switzerland and not all going there to learn ski-ing.

  

Interestingly, Zurich in Switzerland is the only European city with trams sporting Hindi slogans on their sides! That says something about the Swiss desire to pander to Indian tax evaders who probably outnumber similar people from otherespecially developingcountries.

  

Asia as a whole apparently accounts for approximately 50 percent of overall illicit financial flows from all developing nations.

  

The average money taken away from India annually during 2002 to 2006 is supposed to be around $ 27.3 billion. Which means in those five years the amount stashed away equalled $136.5 billion or about half of India’s Foreign Exchange Reserves. It is something to ponder over.

 

 Instead of constantly talking about secularism, our political parties can talk about money stashed abroad and how to get it back.

 

L.K. Advani has made a good start. He needs the support of all decent-minded voters in India.

http://www.freepressjournal.in

Congress made lives of 'aam aadmi' difficult, says Modi

May 06, 2009 15:44 IST

On the issue of the black money stashed in foreign banks, Modi cited former Prime Minister Rajiv Gandhi's [Images] statement that out of every rupees spent by Centre for the poor, only 10 paise reaches to them.

"The remaining 85 paise which went to the corrupt officers and leaders during the last 60 years are lying in foreign banks. If it comes back to the country, it can change the lives of crores of people," he claimed.

http://election.rediff.com/report/2009/may/06/loksabhapoll-cong-responsible-for-aam-aadmi-woes-modi.htm


Shy Rao, shameless Singh 

 

By S Gurumurthy 
05 May 2009 01:42:00 AM IST(New Indian Express)

 

The Quattrocchi case is an embarrassment for the Government of India... The court says we do not have a strong case”. It is not Antonia Maino (aka Sonia) Gandhi defending her Italian friend. It is Prime Minister Manmohan Singh as if she had appointed him as the advocate to plead for Q. “It’s not a good reflection on the Indian legal system,” says the PM moved by compassion for Q, “that we harass people while the world says we have no case.” Singh, who was with the South Commission on a comfortable salary and perks when the Bofors scam rocked the country, seems totally unaware of the facts of the Bofors scam. Here is a short trailer of the scam.
The Bofors scam — pay-off for India’s gun purchase deal with Sweden — broke out in 1987. A third of the Indians living today were not yet born then; and a fourth of the Indians living then are no more alive today. So some history needs to be recalled here. First, the Bofors payoff was exposed by the media and the Rajiv government went all out to suppress the exposure. Including the payoff of $36.5 million to Q, the Bofors deal contemplated three streams of payoff totalling $250 million. Persistent investigations by the media and the CBI brought out the involvement of Q in the gun deal.
The closeness of Q and his wife Maria to Sonia family was always well known.
The Sonia and Maria families spent their weekends and annual holidays together.
They left one’s children in the custody of the other when going out of station. So intense was their relationship. The media found that some $7.3 million from Bofors AB had found its way into Q’s secret bank accounts. Facts began to tumble out testifying that it was fee to Q for swinging the $1.2 billion gun deal for the Swedish gun maker.
Here is how Q got the deal for Bofors.
The Rajiv Gandhi government could not decide for a long time what gun to buy — the British, Austrian or Swedish. The two brokers engaged by Bofors could not expedite the deal. Suddenly, in the second half of 1985, AE Services (AES), a shell company, entered the deal with this offer to Bofors: “Look. If we get you the deal by March 31, 1986, give us a fee of three per cent. If not, don’t pay.” Bofors accepted the offer and signed up with the AES shell on October 15, 1985. Unless Bofors knew that the man behind AES had had the clout to get it done from the Rajiv government, it would never have signed with a shell company.
And AES shell did get the Rajiv government to sign the contract with Bofors on March 22, 1986 — seven days ahead of the target date of March 31, 1986. Within six months, AES got the first tranche of its fee of $7.3 million. Proof emerged slowly that this money finally went to Q, showing he was the man behind the shell.
Bofors remitted on September 3, 1986, $7.3 million into AES account number 18051-53 in Nordfinanz Bank, Zurich.
This equalled 20 per cent of the three per cent bribe of $36.5 millions due to AES.
Two weeks later (on September 16, 1986) AES delivered $7 million into account number 254.561.60W in the same bank in the name of Colbar Investments — a company controlled by Q and Maria.
In April 1987, the Swedish Radio broke the news of bribes in Bofors deal with India. Later, in June 1988, the media published authoritative documents seized by the Swedish police which established the payoff. By now, Bofors scam had become a huge national issue.
Forthwith Q and Maria hurriedly shifted their loot, grown with interest, from Geneva to Channel Islands, to New York to Austria. First, on July 25, 1988 $7.9 million moved from Colbar to account number 488.320.60X of Wetelsen Overseas SA, in UBS, Geneva. Next, on May 21, 1990, $9.2 million moved from Wetelson to account number 123983 of IIDCL, Ansbacher, St Peter Port, Guernsey (Channel Islands). Later, on June 5, 1990, $2.4 million channelled into code-named account ‘Robusta’ in Banque Karfinco SA from Swiss Bank Corp, New York. Afterwards, on June 12, 1990, $5.3 million was transferred to code-named accounts ‘Arabica’, ‘Robusta’ and ‘Luxor’ in Austria from Swiss Bank accounts in Geneva.
Within six days of the Swiss government giving these details to India in 1993, Q slipped out of India and turned a fugitive, thanks to the Narasimha Rao government helping him to run away.
Later, in June 2003, Interpol found that Q and Maria had two accounts, bearing numbers 5A5151516L and 5A5151516M in the London branch of the Swiss bank BSI AG with Euros three million and $1 million.
They were frozen on CBI’s request.
British courts later repeatedly turned down Quattrocchi’s several appeals to de-freeze the accounts.
But, on December 22, 2005, the Congressled UPA government U-turned. H R Bharadwaj, the law minister, got the additional solicitor general of India, B Dutta, to go to London to do the dirty job of releasing the amounts.
Can anyone say now that Q is innocent and he just received some charity of $7.3 million from Bofors? Yet the Sonia-led government allowed Q to smuggle the bribe from the frozen accounts. All that the CBI asks of Q is this: Come to India and answer these questions — why Bofors paid him the money; did it relate to the gun deal; what is his relation with Sonia family, AE Services, Colbar Investments and the coded and numbered bank accounts through which the payoff has finally reached him.
Why not Sonia Gandhi just ask him to appear before the court and prove his innocence? Why does she, on the contrary, abet his refusal to present himself before courts in India? It is clear that she will not ask him. Why? Here is the answer: unless Sonia protects Q here, he will not protect her outside. The stakes seem to be too high.
QED: Manmohan Singh today does what Sonia wants like Narasimha Rao did then what she wanted. Yet, there is a difference between how the two obliged her. Rao felt shy to do what she wanted. So he did it stealthily. Singh does what she wants openly and shamelessly. Even, a Sonia family retainer like H R Bharadwaj feels shy to own up the shameless withdrawal of the Red Corner Notice on Q; but the PM owns it proudly. Singh is shameless about what Rao used to feel shy. Why? Unlike Rao, Singh is not an elected prime minister but a nominated one; he is not chosen by democratic process, but selected by the dynasty; he is not backed by the people, but backed by the family. So the shift from shyness to shamelessness, from Rao to Singh  
comment@gurumurthy.net
About the author:
S Gurumurthy is a well-known commentator on political and economic issues

Obama Calls for New Curbs on Offshore Tax Havens

(NYTimes May 5, 2009)

WASHINGTON — President Obama on Monday called for curbing offshore tax havens and corporate tax breaks to collect billions of dollars more from multinational companies and wealthy individuals.

The move would appeal to growing populist anger among taxpayers but is likely to open an epic battle with some major powers in American commerce.

With the proposals he outlined at the White House, the president sought to make good on his often repeated campaign promise to end tax breaks “for companies that ship jobs overseas.”

He estimated the changes would raise $210 billion over the next decade and help offset tax cuts for middle-income taxpayers as well as a permanent tax credit for companies’ research and development costs.

The changes, if enacted, would not take effect until 2011, when administration officials presume the economy will have recovered from the recession. But business groups were quick to condemn the White House for proposing tax increases amid a global downturn.

“This plan will reduce the ability of U.S. companies to compete in foreign markets, which will not only reduce jobs, but will also cripple economic growth here in the United States. It couldn’t come at a worse time,” said John J. Castellani, president of the Business Roundtable, a trade association of major businesses.

The proposals would especially hit pharmaceutical, technology, financial and consumer goods companies — among themGoldman SachsMicrosoftPfizer and Procter & Gamble — that have major overseas operations or subsidiaries in tax havens like the Cayman Islands.

They also have some of the mightiest lobbying armies in Washington, as well as influential patrons in Congress. That combination will test Mr. Obama’s ability to stand up to powerful interests and marshal support among lawmakers at the same time that he is trying to win passage of major health and energy measures.

At issue are tax laws that were originally intended to prevent multinational corporations from being double-taxed, by the United States and by foreign countries, by allowing companies to defer reporting their foreign income to the Internal Revenue Service and to get tax credits in the United States for foreign taxes paid.

Economists are divided over whether higher taxes would give corporations incentives to move jobs overseas or impair economic growth at home. In the coming debate, both Mr. Obama and the business lobby will claim that their way will save jobs.

The top corporate tax rate is 35 percent, but the Treasury Department estimated that in 2004, the most recent year for which data is available, American multinationals paid $16 billion in taxes on $700 billion in foreign income — an effective rate of 2.3 percent.

Mr. Obama’s tax-raising initiative comes amid government bailouts for major financial institutions, auto companies and insurance giants, and polls show growing opposition. In February, a Senate proposal to give multinational companies a big tax cut if they brought profits back to the United States was defeated by a surprisingly large margin.

The president, in his remarks, reflected the public’s restlessness in some of his most populist language to date.

Mr. Obama said most Americans paid taxes as “an obligation of citizenship,” but some businesses and rich people were “shirking” their duties, “aided and abetted by a broken tax system, written by well-connected lobbyists on behalf of well-heeled interests and individuals.”

“It’s a tax code full of corporate loopholes that makes it perfectly legal for companies to avoid paying their fair share. It’s a tax code that makes it all too easy for a number — a small number of individuals and companies to abuse overseas tax havens to avoid paying any taxes at all,” the president said. “And it’s a tax code that says you should pay lower taxes if you create a job in Bangalore, India, than if you create one in Buffalo, New York.”

The Democratic chairmen of the House and Senate tax-writing committees, Representative Charles B. Rangel of New York and Senator Max Baucus of Montana, said in statements that some of Mr. Obama’s proposals reflect ideas from their panels. But Mr. Baucus also kept his distance, saying “further study is needed to assess the impact of this plan on U.S. business.”

Congressional Republicans, usually quick to condemn any tax increase proposals, were relatively quiet, perhaps reflecting wariness about appearing to defend tax shelters. Senator Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee and a frequent critic of tax schemes, said the president could “count on my support” to crack down on abuses. “But if he’s using tax shelters as a stalking horse to raise taxes on corporations at the cost of U.S. jobs, he’ll lose me,” Mr. Grassley added.

Business groups had feared Mr. Obama would seek repeal of the tax-deferral law but he stopped short of that. Instead, one of his proposals would prohibit companies from taking deductions in the United States for expenses on overseas investments until they have paid domestic taxes on the profits from those investments. Treasury estimated this proposal alone would raise $60.1 billion from 2011 through 2019.

General Electric has deferred American taxes on $75 billion in foreign profits by keeping them outside the United States, according to its annual report for 2008, and said it has no plan to ever repatriate that money. Citigroup, which has received $45 billion in bailout assistance, has deferred taxes on $22.8 billion in foreign income.

The administration would raise $86.5 billion by changing so-called check-the-box rules to end the practice in which some companies create foreign subsidiaries to shift income in ways that avoid taxes.

The Government Accountability Office has found that 83 of the 100 largest American companies have subsidiaries in tax havens; it counted 83 subsidiaries for Procter & Gamble alone, including in Bermuda, the Cayman Islands and Liechtenstein. Financial services companies had even more, with Citigroup showing 427 and Morgan Stanley, 273.

Another proposal would close a loophole that allows companies to inflate the credits they claim for foreign taxes to the I.R.S., for an estimated $43 billion in new revenues. Separate steps to crack down on wealthy individuals would raise nearly $9 billion.

Tax experts, including some with Democratic leanings, caution that the proposals could put American corporations at a competitive disadvantage. The United States is part of a dwindling minority of industrialized countries that tries to tax corporate profits on a global basis. Most European governments tax corporations on the basis of their profits within their borders. “If other countries are adopting systems that are friendlier to multinational corporations, then companies will have an incentive to locate their corporate headquarters outside the United States,” said Alan Auerbach, a professor of economics at the University of California, Berkeley, who advised Senator John Kerry during his 2004 presidential campaign.

James Hines, an economics professor at the University of Michigan, suggested the president’s proposals could be seen as creating unfair trade advantages for domestic goods and services. 

http://www.nytimes.com/2009/05/05/business/05tax.html?_r=1&hp=&pagewanted=print

Obama Takes Aim at Offshore Tax Havens

By JEFF ZELENY MAY 4, 2009, 8:05 AM (NYTimes)

 

Updated
President Obama will present a set of proposals on Monday aimed at changing international tax policy, calling for the elimination of benefits for companies and wealthy individuals that harbor their cash in offshore accounts.

The president and Treasury Secretary Timothy F. Geithner will announce their plans during a late-morning appearance at the White House. The proposed overhaul in the tax code, which will be fully unveiled in the administration’s budget later this week, could help raise $210 billion in revenues over the next 10 years.

One of the key proposed changes would restrict companies from deferring the payment of taxes on profits earned overseas. Administration officials said the plan also would keep firms from taking deductions against their taxes by inflating the amount of foreign taxes they paid.

Mr. Obama raised the idea frequently during his presidential campaign. In a speech to Congress in February, as he outlined his priorities for the year, he pledged to make the tax code more equitable by “finally ending the tax breaks for corporations that ship our jobs overseas.”

The White House said that Mr. Obama would seek to crack down on overseas tax havens in an attempt to “close the international tax gap.” The president is aiming to take away the competitive advantage for companies that invest and create jobs overseas, working to replace their tax advantages with incentives to produce jobs in the U.S.

Several large businesses have opposed the proposal, telling Congressional leaders in March that the provisions would make U.S. companies less competitive. About 200 companies and trade associations, including Microsoft Corp., General Electric Co. and the U.S. Chamber of Commerce, signed a letter stating that the proposed changes to the tax code would put them at a disadvantage with their rivals.

While Democrats have a strong majority in the House and Senate, the administration’s proposals are still expected to face considerable opposition.

In his presidential campaign last year, Mr. Obama often criticized provisions in the tax code that allowed American firms with overseas operations to defer paying taxes on corporate profits, providing that they placed the money back into their foreign subsidiaries.

In his speech on Monday, the president will call for an end to that practice, as well as seeking to close the loopholes that allow companies and individuals to legally avoid paying billions in taxes through hidden accounts.

The White House said that Mr. Obama also will call for a crackdown on the abuse of tax havens by wealthy individuals. Officials said the president will propose making it more difficult for financial institutions and wealthy Americans to evade their taxes.

The speech is scheduled for 11:05 a.m. in the Grand Foyer of the White House

http://thecaucus.blogs.nytimes.com/2009/05/04/obama-takes-aim-at-offshore-tax-havens/?hp

UPA questions SC authority to review public loot in tax havens

It is unfortunate that the media does not provide a copy of the affidavit filed by UPA government in SC. One has to glean the truth from many reports.

One thing is clear. The government also pointed out that the issue of retrieving black money stashed abroad is in the realm of international law and diplomacy and beyond the ambit of judicial review.

Did SC ask for this?

Kalyanaraman 

Germany has given tax evaders’ details to India: Government (Second Lead)

May 2nd, 2009 - 8:54 pm ICT by IANS  -

New Delhi, May 2 (IANS) Assuring the Supreme Court that it was trying to retrieve black money stashed in tax havens abroad, the government Saturday said it has already received information from Germany on Indian money in a tax haven and income-tax sleuths were following up the matter.
The finance ministry revealed this in a 27-page affidavit submitted to the apex court in response to a lawsuit accusing the Congress-led government of doing precious little to retrieve Indian black money stashed abroad, worth an estimated Rs.70 trillion.

In its affidavit, the government also told the court that after persistent efforts in collaboration with international community Switzerland agreed to make its secretive banking laws and norms more transparent in tune with the global standards.

Priya V.K. Singh, director of the department of revenue under the finance ministry, told the court that following its repeated efforts since Feb 27 last year, the government got the information on Indians having with secret accounts in LGT Bank in Liechtenstein March 18 this year.

The government, however, added in its affidavit that the information procured cannot be made public owing to the condition of strict confidentiality under which it was procured.

“On account of persistent follow-up by the government, the German government provided the information (about Indians having secret bank accounts) on March 18, 2009,” said the affidavit.

The move followed a media report in February 2008 that a former employee of the bank in Liechtenstein had sold data on about 1,400 account holders to tax authorities across the world.

“The said information, however, was made available on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement,” it added.

“The information received from the German authorities has been forwarded to various taxation authorities concerned for action” under the tax laws and tax authorities have initiated action, said the affidavit.

Responding to the allegation in the lawsuit that the government had done nothing to retrieve “black money” of Pune resident Hasan Ali Khan and his associate Kashinath Tapuria stashed in UBS Bank of Switzerland, the affidavit said the government has already approached Swiss authorities for information.

The affidavit said though the Swiss authorities have already acceded to the international community’s plea for greater transparency in banking operations there, they are yet to implement it through changes in their internal laws.

As a result, India is yet to procure any significant information from Swiss authorities about Khan’s accounts.

The affidavit said that the income tax department, on the basis of evidence gathered during its probe, has raised a demand of tax worth over Rs.718 billion against Khan, his wife and their associates.

The government said that the Enforcement Directorate is also proceeding independently against them for flouting the financial laws.

Questioning the timing and notice behind the filing of the lawsuit, the government affidavit sought its dismissal saying that it was politically motivated as it came during elections and had been filed by people either close to or belonging to the main opposition Bharatiya Janata Party (BJP).

The lawsuit was filed by former law minister Ram Jethmalani, former Lok Sabha general secretary Subhash C. Kashyap and former Punjab police chief K.P.S. Gill.

The government also pointed out that the issue of retrieving black money stashed abroad is in the realm of international law and diplomacy and beyond the ambit of judicial review.

http://www.thaindian.com/newsportal/business/germany-has-given-tax-evaders-details-to-india-government-second-lead_100187498.html

 

P-Notes in country’s larger interest: Centre tells SC
4 May 2009, 0233 hrs IST, Sanjay K Singh, ET Bureau

NEW DELHI: The Centre has told the Supreme Court that investments through the issuance of participatory notes (P-Notes) are in the larger 

 

economic interest of the country. 

In an affidavit filed in the apex court on Saturday, the government said, “The expert group on encouraging FII flows and checking the vulnerability of capital markets to speculative flows (the Lahiri committee) discussed by various concerns arising out of P-Notes issued by FIIs. The central government has decided the continuation of issuance of P-Notes is in the larger economic interests of the country”.
 

The affidavit is in response to a PIL filed by former Union law minister Ram Jethmalani and others contending that P-Notes were undesirable instruments since they did not disclose the true identity of investors. The PIL has been listed for hearing on Monday.
 

Significantly, the government said in its affidavit that it is “unable to subscribe to the position that evidence exists with Sebi that anonymous entities are misusing P-Notes in the Indian markets”.
 

It also said that Sebi is empowered to obtain information about the final holder/beneficiary or of any holder at any point of time in case of an investigation or inquiry. FIIs are now obliged to provide the requisite information to the markets regulator, the Centre said.
 

“The central government was duly informed by Sebi that the Sebi (FII) Regulations, 1995, as amended, already provided for disclosure of full information regarding P-Notes issued by the FIIs/sub-accounts/affiliates, as and when in such form as the Sebi may require,” the affidavit said.
 

The Centre said the monthly reporting format for FIIs requires them to provide “details of outsourcing ODIs”. It said Sebi is “adequately equipped” to call for any information regarding P-Notes both under provisions of the Sebi Act, 1992, and Regulation 20A of the Sebi (FII) Regulations, 1995.
 

“A FII in India is subject to money laundering and KYC requirements. Therefore ... the nature of fund flow would be reflected in the accounts opened by FIIs with banks which in turn are under mandatory obligation to comply with the provisions of KYC and Prevention of Money Laundering Act,” said affidavit filed by Priya VK Singh, director in the department of revenue.

 

http://economictimes.indiatimes.com/Market-News/P-Notes-in-countrys-larger-interest/articleshow/4480311.cms

 

Centre assures SC of prompt action on black money


Prabhakar Rao Voruganti

First Published : 03 May 2009 02:14:00 AM IST

Last Updated : 03 May 2009 11:36:48 AM IST

NEW DELHI: The Union of India on Saturday filed an affidavit in the Supreme Court, saying there was no inaction on the part of the government in trying to get to the bottom of the Rs 70,000 crore money stashed away in foreign banks.

The affidavit was filed in response to a  petition filed in public interest by Citizens of India, comprising eminent Indians, including former Union Law Minister Ram Jethmalani and former DGP K P S Gill, alleging that an estimated $1.4 billion, roughly Rs 70,00,000 crore, was siphoned off from India and stashed away in undisclosed foreign bank accounts.

Priya V K Singh, Director, Department of Revenue, in her affidavit averred that after becoming aware on February 27, 2008 that the German government was willing to share information available with it in respect of account holders in LGT Bank, Liechtenstein, a letter was addressed to them seeking information. The German government replied on March 17, 2008, saying that it was not in a position to provide the information sought, but would give the information as soon as they had detailed findings about whether and to what extent Indian taxpayers were involved.

After this, the Central Government followed it up with a series of reminders, telephonic requests and e-mail from May to December 2008, then in February and March 2009. Finally, the German government made available the information on March 18, 2009, but on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement.

In fact, many citizens filed applications under the Right to Information Act and sought the information about the action taken by the government.

The petitioners did not undertake any such exercise, but chose to make wild, reckless and baseless allegations against the government, the affidavit averred.

Consequent to the information received from the German authorities, the same was forwarded to tax authorities for action and the authorities initiated the process of reopening the assessments, Priya submitted.

On the issue of Hassan Ali Khan and his associates, the Income Tax Department, on the basis of the seized documents, had raised a total demand of Rs 71,848.59 crore from Ali Khan, his wife Rheema and other associates, the affidavit said.

With regard to Kashinath Tapuria and his wife, existence of overseas bank accounts came to light and their passports are under the possession of the Enforcement Directorate and they were last questioned on February 9, 23 and 24, the affidavit disclosed.

The affidavit went on to say that the petitioners relied on an article written by one Raja Vaidynathan in ‘Eternal India’. Vaidyanathan is a member of the Task Force constituted by the BJP on the issue of stashed funds. The Task Force includes S Gurumurthy and Mahesh Jethmalani.

On the allegation that huge amounts of money  were deposited in foreign banks, especially in Switzerland, the government stated that there are no authentic figures about the amount of money in those bank accounts.

The government has approached the Swiss government for renegotiation of the Article relating to exchange of information. Under the circumstances, the Central government acted with utmost urgency in the matter and as per existing standards, and unless specific information about the depositors is made  available, a fishing or roving enquiry is not permissible, Priya said. With these averments, she sought dismissal of the petition.

 

http://www.expressbuzz.com/edition/story.aspx?Title=Centre+assures+SC+of+prompt+action+on+black+money&artid=annlzJMLXWs=&SectionID=b7ziAYMenjw=&MainSectionID=b7ziAYMenjw=&SEO=Department+of+Revenue&SectionName=pWehHe7IsSU=

 

Govt says it’s on black money trail

Gives SC Names Of 3 Indians Who Parked $8bn In Secret Accounts

Dhananjay Mahapatra | TNN 


New Delhi: The Centre indicated to the Supreme Court on Saturday that Indians may be among those said to have parked large amounts of illicit money with LGT Bank in the tax haven of Lichenstein. The government said it was trying to retrieve the cash. 
    The hint that Indian nationals may be among those with secret LGT deposits was in the muchawaited affidavit the government filed in response to a PIL that sought recovery of the money. 
    Wary of disclosing much at this initial stage of investigation, the UPA government said it has already activated income and wealth tax sleuths to study the data and take appropriate action. 
    On March 18, the German authorities gave a list of LGT accountholders to India. That Indians were part of this list was indicated by the Department of Revenue’s assertion that “the said authorities had initiated the process of reopening the assessments under the Income Tax Act, 1961, and Wealth Tax Act, 1957.” 
    The issue of illicit money parked abroad has taken on serious dimensions because of a new worldwide mood favouring an end to “secret banking”. 
    But here, the issue acquired partisan overtones during the election campaign after the BJP embraced it with vigour, causing Congress to attack it as exaggerating the scale. 
    In its affidavit, the Centre specifically referred to huge deposits abroad by Pune-based Hasan Ali Khan and his associate, Kashinath Tapuria. Coordinated efforts of the I-T department and Enforcement Directorate (ED) “led to detection of account with the UBS Bank in the name of Rheema Khan, wife of Hasan AliKhan..”, said the Centre’s affidavit filed by additional solicitor general Gopal Subramaniam. 
    The ED has issued a show cause notice to Hasan Ali Khan for contravention of provisions of the Foreign Exchange Management Act, 1999, for “unauthorizedly dealing of $8 billion”, the Centre said. It added that the I-T department, on the basis of seized documents and other materials gathered during investigations, “have raised a total demand of Rs 71,848.59 crore against Ali Khan, his wife Rheema and other associates”. 
    It said, “The investigations carried out till date in respect of Kashinath Tapuria and his wife reveal existence of certain overseas bank accounts. The government is in the process of obtaining details of the said accounts and ED has seized their passports”. 

http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=CAP/2009/05/03&PageLabel=1&EntityId=Ar00100&ViewMode=HTML&GZ=T

 

‘No authentic figure on black money abroad’

Dhananjay Mahapatra | TNN 


New Delhi: In its affidavit to the SC, the Centre made specific references to huge deposits abroad by Pune-based Hasan Ali Khan and his associate, Kashinath Tapuria. 
    The response came far too late than the self-imposed 48-hour deadline that the Centre had given itself in the Supreme Court on April 22 to make the Bench headed by Chief Justice K G Balakrishnan withhold issuance of notice on a PIL filed by renowned lawyer Ram Jethmalani and others, who had accused the UPA of being lethargic in retrieving a possible Rs 70 lakh crore worth of black money stashed in foreign banks. 
    The UPA felt that the figure of Rs 70 lakh crore as black money bordered on fantasy and said: “There are no authentic figures about the amount of money lying in those bank accounts.” It said: “The present petition presumably pertains to money lying in foreign accounts which are exclusive of lawful and legitimate deposits which can be made by both Indian residents and NRIs.” After trashing the charge of inaction to retrieve the black money, Centre said it saw a close link between the PIL, its timing and the opposition BJP. 
    It said the entire PIL was based solely on an article written by one Raja Vaidyananthan in a Magazine, ‘Eternal India’. The Congress-led UPA government said Vaidyananthan is a member of BJP’s Task Force on strategies to bring back ‘stashed funds’. 
    The Centre also tried to draw an indirect link between Jethmalani and BJP through his son Mahesh Jethmalani, who is contesting on the BJP ticket from Mumbai.

 

http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=TOINEW&BaseHref=CAP/2009/05/03&PageLabel=7&EntityId=Ar00704&ViewMode=HTML&GZ=T

 

PIL on black money politically motivated: Centre

Legal Correspondent

New Delhi: The Union government has described as ‘misconceived’ and ‘politically motivated’ the petition filed by the former Union Law Minister, Ram Jethmalani, and five others for a direction to bring back Rs.70,00,000 crore illegally hoarded in Swiss and other foreign banks.

The affidavit, filed by Priya V.K. Singh, Director in the Department of Revenue, said: “There are no authentic figures for the amount of monies lying in those bank accounts. The petition presumably pertains to monies lying in foreign accounts, which are exclusive of lawful and legitimate deposits which can be made by both Indian residents and non-resident Indians.”

However, with regard to the money allegedly lying in various foreign banks, the Centre was constantly alive to the need to be able to retrieve information and, towards this end, initiatives had been taken continuously by Prime Minister Manmohan Singh during the G-20 summit, the affidavit said.

The Centre said the issues raised in the petition pertained to policy, regulation, economic affairs, international cooperation and political leadership and did not qualify for examination by standards of judicial review.

Referring to an article, by Raja Vaidyanathan in ‘Eternal India’, relied on by the petitioners, the Centre said: “Mr. Vaidyanathan is a member of the Task Force constituted by the Bharatiya Janata Party, which was asked to submit an interim report on “steps to be taken by the Indian Government” to bring back ‘stashed funds’.

The Task Force of four members includes R. Gurumurthy and Mahesh Jethmalani, presently contesting the elections on behalf of the BJP.”

Under a Double Taxation Avoidance Agreement (DTAA) India had with the Swiss Confederation, information could be exchanged but “the contracting states are not under an obligation to carry out administrative measures at variance with their regulations or supply particulars not procurable under their legislation,” the Centre said.

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 the 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 government of India already approached the Swiss government seeking renegotiation of Article on exchange of information under the DTAA. Under the circumstances, the Centre acted with the utmost expedition, the affidavit said.

The case will come up for hearing on Monday.

http://www.hindu.com/2009/05/03/stories/2009050361202200.htm

 

India seeks to renegotiate Swiss DTAA
3 May 2009, 0341 hrs IST, Sanjay K Singh, ET Bureau

NEW DELHI: The Centre has told the Supreme Court that it has approached the Swiss government seeking renegotiation of the Double Taxation 

 

Avoidance Agreement (DTAA) pertaining to exchange of information on the bank accounts of Indians. The Swiss Confederation has also informed the OECD that it was willing to withdraw its reservation on the disclosure of information due to rule of bank secrecy, said government in its affidavit filed in the apex court on Saturday. 

The government, however, ruled out any sort of fishing or roving enquiry unless specific information about depositors becomes available. “The Government of India has already approached the Swiss government seeking renegotiation of Article concerning exchange of information in DTAA with them”, said Priya V K Singh, the director in the department of revenue in the affidavit.
 

The Centre said, “it was only in March 2009 that the Swiss Confederation informed OECD that it intended to adopt the OECD standards as per Article 26 of the OECD Model Tax Convention and withdraw the corresponding reservation and enter into negotiations for revising its Double Taxation Agreements”.
 

The OECD standards on exchange of information as contained in Article 26 of the OECD Model Tax Convention provides for exchange of information even if there is only domestic interest of the requesting state i. e. enforcement of tax laws of the requesting state and no provision DTAA is to be applied.
 

As per the OECD standards, the limitation of information not being at the disposal of tax administration because of bank secrecy cannot be used to prevent exchange of information held by the banks. The Swiss Confederation had entered reservations on these OECD standards. In accordance with Article 26 of the DTAA, the competent authorities in India and Swiss Confederation can exchange information, being information at their disposal under their respective taxation laws in the normal course of administration, as is necessary for carrying out the provisions of the DTAA in relation to taxes.
 

In the past, the Swiss competent authority has consistently refused to share bank information on the grounds that information regarding bank deposits of Indian residents is not necessary for the application of the DTAA but is required only for the enforcement of Indian internal tax laws and that such information was not at their disposal under Swiss laws in the normal course of tax administration, said government.
 

However, government stated that as per the OECD standards, unless specific information about the depositors becomes available, fishing or roving enquiry is not permissible. The Centre also claimed that because of its continuos efforts with the German government, it has gathered information about Indian account holders in the LGT Bank Liechtenstein. “On account of persistent follow up by the Central government, the German government on March 16, 2009, informed that they were in a position to provide the information and said information was made available to the Central government on March 18, 2009,” said affidavit.
 

However, ruling out to divulge the details, the government said, “the information was made available on the condition of strict confidentiality of contents under the Double Taxation Avoidance Agreement”. The affidavit has been filed in response to a PIL seeking direction to the government to take steps to retrieve the hege amount of unaccounted money lying in various foreign banks and financial institutions. Former union law minister Ram Jethmalani and others had moved the apex court.

http://economictimes.indiatimes.com/PoliticsNation/Govt-seeks-details-of-Indian-acs/articleshow/4477407.cms

 

‘Swiss authorities refused to share data on stashed funds’

 

No slackening of efforts on our part: Govt’s affidavit in SC.



Our Bureau

 

Centre denies slackness in hunt for ‘stashed funds’ in Swiss and other foreign banks

Cites Swiss authorities’ consistent refusal to share bank information under DTAA

Swiss confederation decided to adopt OECD standards only in March 2009-05-04

Renogitiation sought on Indo-Swiss DTAA article on information exchange

Germna Govt. shared info with India in March 2009; Indian tax authorities initiatite reopening of assessments

New Delhi, May 2 The Centre has refuted allegations that it was slack in its efforts to bring back into India the funds stashed by Indian citizens in foreign banks, especially the Swiss banks.

In its affidavit in reply to a public interest litigation filed in the Supreme Court, the revenue department has said that it was the Swiss authorities, citing DTAA provisions, who had “consistently refused to share bank information” and that the Centre had acted with “utmost expedition” in the matter.

The revenue department affidavit said that the Swiss authorities had taken a stance that the information on bank deposits of Indian residents was not necessary for the application of the double taxation avoidance agreement (DTAA). The Swiss authorities felt that such information was required only for the enforcement of Indian internal tax laws and that it (such information) was not at their disposal under Swiss laws in the normal course of tax administration.

This stance was in variance to the OECD Model Tax Convention, which required States to exchange information even if there is only domestic interest of the requesting State, i.e., enforcement of tax laws of the requesting State, and no provision of DTAA is to be applied.

OECD standards

As per the Organisation for Economic Co-operation and Development (OECD) standards, the limitation of information not being at the disposal of the tax administration because of bank secrecy cannot be used to prevent exchange of information held by banks.

While the Swiss Confederation had entered reservations on these standards, it was only in March 2009 that it decided to adopt the OECD standards and withdraw the corresponding reservation and enter into negotiations for revising its double taxation agreements.

Accordingly, the Union Government has approached the Swiss Government for renegotiation of the Article concerning exchange of information in the DTAA, the apex court was informed.

India’s DTAA with Switzerland was notified in April 1995 and amended through a Protocol on February 7, 2001.

Meanwhile, on the issue of obtaining information from the German Government with respect to Indian account holders in the LGT Bank, Liechtenstein, the revenue department affidavit said that the information was made available on March 18, 2009. However, the said information was made available on the condition of strict confidentiality of contents under the DTAA.It was submitted to the apex court that this information has been forwarded to various tax authorities for action under the Indian Income-Tax law. The Indian tax authorities have now initiated the process of reopening the assessments under the Income-Tax Act 1961 and Wealth Tax Act, 1957.

The affidavit also said that the Centre was unable to subscribe to the position that evidence exists with the SEBI that anonymous entities are misusing Participatory Notes in the Indian markets.

The Centre also refuted the allegation of the petitioners that grant of licence to UBS Bank AG to open a retail branch in Mumbai was to enable acquisition of Standard Chartered Mutual Fund, stating that it was “incorrect”.

http://www.thehindubusinessline.com/2009/05/03/stories/2009050351230100.htm

 

Black money trail: Swiss ready to revise treaty

4 May 2009, 0044 hrs IST, TNN




NEW DELHI: The government has approached Swiss authorities to renegotiate its Double Taxation Avoidance Agreement (DTAA), a tax treaty between the two countries in force since 1995, to obtain details of bank accounts maintained by Indians in Switzerland. 

The Swiss government has in the past refused to share bank information pertaining to Indians with New Delhi on the ground that such details were not necessary for application of the DTAA. Swiss authorities had expressed inability to provide details, citing their own laws, since India's requests were related to enforcement of its internal tax laws.
 

However, after the G-20 nations adopted a tough posture at their recently held London summit, seeking to bring tax havens and non-cooperating jurisdictions under close scrutiny, Swiss authorities expressed willingness to cooperate.
 

Just before the London summit, the Swiss confederation had told the Organisation for Economic Cooperation and Development (OECD) -- a Paris-based group with 30 member countries including the US, UK and many European nations -- that it was ready to withdraw its earlier reservation on sharing information and renegotiate its tax treaty with other governments.
 

But how effective the revised tax treaty will be is quite clear from a rider provided by the Centre in the affidavit it submitted before the Supreme Court on the subject last week. The affidavit said, ``Even as per the OECD standards, unless specific information about the depositors becomes available, fishing or roving enquiry is not permissible.''
 

India is part of the task force constituted by the G-20 at its London summit to formulate a ``global plan for recovery and reform which promises to take action against non-cooperative jurisdictions, including tax havens and also to deploy sanctions to protect public finances and financial systems''.
 

On alleged role of Swiss banks in the 2004 stock market crash, the affidavit said that Securities and Exchange Board of India had in 2005 barred Swiss financial institution UBS Asia from issuing and renewing any participatory notes for a year. But this was following its refusal to disclose information relating to an investigation carried out by Sebi, not for its role in the market crash.

http://timesofindia.indiatimes.com/Black-money-trail-Switzerland-ready-to-revise-treaty/articleshow/4480130.cms

 

Centre 'alive' on black money in foreign banks

 

New Delhi, dhns:May 3, 2009 Deccan herald

 

The Centre has been constantly alive to the need to be able to retrieve information about the money which is lying deposited in foreign accounts.

 

 

The Centre on Saturday filed an affidavit in the Supreme Court saying that it was yet to make any breakthrough to bring the black money stashed away in foreign banks back to the country, despite working relentlessly on identifying it for the past four years.

“The Centre has been constantly alive to the need to be able to retrieve information about the money which is lying deposited in foreign accounts. Further, towards this end, initiatives have been taken on continuous basis,” said the affidavit filed by the government in response to a PIL filed by former Union Law Minister Ram Jethmalani, former Punjab DGP K P S Gill and others.

“In fact, the Central government led by Prime Minister Manmohan Singh played a major role in the G-20 Summit seeking exchange of information and to persuade countries  which were not falling in line to review their position,” said Priya V K Singh, Director in the Department of Revenue.

 

The government said that the Supreme Court does not have the authority to hear the petition as it pertains to the issues of policy, regulation, economic affairs, international cooperation and political leadership. “Therefore, (the SC) does not qualify for examination by standards of judicial review,” the government said. The apex court was urged to dismiss the petition as its contents were based on an article ‘Steps to be taken by the Indian government’ to bring back “stashed funds”, written by Vaidyanathan, a member of the task force constituted by the BJP.

 

http://www.deccanherald.com/Content/May32009/scroll20090503133964.asp?section=updatenews

 ---------- Forwarded message ----------
From: 
Prabhakar Pennathur <psprab@gmail.com>
Date: Sat, May 2, 2009 at 7:25 AM
Subject: Help the return of the public loot stashed in tax havens
To: berlin.centre@oecd.org

Sirs,

We, the ordinary citizens of India, understand, with great consternation and deep concern, that large sums of illegally and surreptitiously looted money are allegedly stashed away by hundreds and thousands of unscrupulous, corrupt, knavish politicians, civil servants, industrialists, businessmen, judges, drug mafia and several others, in tax havens. You would please agree that the said money gas been plundered from the poor people of the country to whom it must rightfully be returned. 

If the guesstimates are to be believed, $1.5 trillion of Indian money is so stashed away, and it means that 750 million Indians have been impoverished at the rate of Rs.100,000 each (which is equivalent of an entire life earnings for most Indians.).

It is the moral responsibility of G-7 nations to get the tax havens to declare the moneys of poor countries held and compel the financial institutions of these tax havens to return the money to the poor countries forthwith.

Kindly enlighten the citizens of India on what Germany proposes to do to make this return of poor peoples' monies a reality.

Thanking you for your consideration & hoping for a kind reply,


P.S.Prabhakar
Chartered Accountant 

-- 
P.S.PRABHAKAR, 
Partner
Rajagopal & Badrinarayanan
Chartered Accountants
Chennai 600 004

Ph: 98400 50586

European Parliament Call For Tax Havens To Be Abolished 

by Ulrika Lomas, Tax-News.com, Brussels 

Wednesday, April 29, 2009

Members of the European Parliament have called on the Group of 20 nations to agree on coordinated and concrete action to “ close down all tax and regulatory havens ” and shut onshore tax and regulatory loopholes which permit " widespread tax avoidance " in major financial centres.

The European Parliament has adopted a resolution on the outcome of the G20 Summit pledge to reform remuneration schemes in a more sustainable way as part of the financial regulatory review. However, this resolution also called on the next G20 Summit to go much further than it did earlier in April when the leading nations threatened to “deploy sanctions” against offshore and low tax jurisdictions to “protect public finances and financial systems.”

“Parliament welcomes and fully supports the request made by the EUROLAT Parliamentary Assembly on April 8, 2009 to the EU-LAC (Latin American and Caribbean) countries 'to act at once to abolish all tax havens on their territory and to work at international level for the abolition of the rest and for sanctions against companies and individuals resorting to their services,'” said a press statement issued by the European Parliament on April 24.

While the European Parliament stated that it welcomes the G20’s declaration that the “era of banking secrecy is over” and supports automatic exchange of information as the most effective tool to tackle tax avoidance, MEPs recommend that the EU should adopt at its own level “an appropriate legislative framework regarding tax havens” and called on its international partners to do the same.

Most offshore financial centres won something of a reprieve from the G20 after being accused of virtually bringing the world to its knees by allowing major global financial institutions to conduct risky business outside of the glare of onshore regulators. Only four territories – Costa Rica, Malaysia (Labuan), the Philippines and Uruguay – were named on the new OECD ‘blacklist’ and these have since been removed following commitments to adhere to minimum standards in tax transparency.

However, opponents of the G20/OECD campaign believe that the offshore territories are merely being made the scapegoats for regulatory failings in the major economies.

In a Strategic Memorandum released by the Center for Freedom and Prosperity on March 30, Daniel J. Mitchell of the Cato Institute argued that the collective actions of the 'high tax' states, such as the United States and the 'old' member states of the European Union, and multilateral bodies such as the OECD, will deal a blow to those who support international tax competition and financial privacy.

" These so-called havens are being assaulted by international bureaucracies such as the OECD ” he observed. " These events do not bode well for supporters of fiscal sovereignty and financial privacy."

http://www.tax-news.com/asp/story/European_Parliament_Call_For_Tax_Havens_To_Be_Abolished_xxxx36449.html

Fwd: Please write to berlin.centre@oecd.org on public loot in tax havens

---------- Forwarded message ----------
From: S. Kalyanaraman <kalyan97@gmail.com>
Date: Fri, May 1, 2009 at 8:55 PM
Subject: Public loot in tax havens
To: berlin.centre@oecd.org


Sirs,

It is a matter of grave concern for the citizens of the world, in particular those living in poor countries like India, that large sums of money are allegedly stashed away in tax havens. If $1.5 trillion of Indian money is so stashed away, it means that 750 million Indians have been impoverished at the rate of Rs.100,000 each (which is equivalent of an entire life earnings for most Indians.).

 

It is the moral responsibility of G-7 nations to get the tax havens to declare the moneys of poor countries held and compel the financial institutions of these tax havens to return the money to the poor countries forthwith.

 

Kindly enlighten the citizens of India on what Germany proposes to do to make this return of poor peoples' monies a reality.

 

Thanking you for your consideration,

 

S. Kalyanaraman

Sarasvati Research Centre, kalyan97@gmail.com 

 Who will probe first family’s billions?

S. Gurumurthy (New Indian Express, 30 April 2009, page 9)

When it comes to the topic of funny money stashed in foreign banks, why has the Congress party observed a studied silence over the years, almost always ignoring charges levelled against the Gandhi family?

Mrs Antonia Maino (aka Sonia) Gandhi has finally broken her silence on the Indian slush money abroad. She told her party workers in Mangalore on April 27, 2009 that "the Congress was taking steps to address the issue of untaxed Indian money in Swiss banks". The delayed response of the first family of the Congress party, troubled by the issue from the word go, is understandable. But, the Swiss money has already become an electoral issue. That is what has finally forced the family to speak so that the party is not any further seen as being in denial and cynical about the Indian slush funds abroad. It is the family's silence, and the party's denial, that turned the issue into an election agenda. Shorn of the allegations normal in election time, all that L K Advani had said on March 29 was this: 'Mr Prime Minister, vigorously take up the issue of Swiss type secret banking and tax havens in the G20 meeting of April 2'. Had the PM told Advani that that was precisely what he was intending to do, that would have been the end of the BJP effort to make an issue of it. A Congress party, unburdened by its first family's anxieties, would have done precisely that, particularly when elections are round the corner. But neither the PM nor the party officials would dare do that. Why? Read on for the underlying drives.

The first family has other, perhaps bigger, reasons to worry, apart from about the Bofors slush money. Two more stunning exposures — but not as well-known as the Bofors scam — make the first family a target for investigation on slush money. Now on to the heart of the story which has three limbs. FIRST: $2.2 BILLIONS IN RAJIV'S SECRET ACCOUNTS, SAYS SWISS MAGAZINE The shocking exposure came from Switzerland itself. The most popular magazine of Switzerland, Schweizer Illustrierte, [dated November 11, 1991] did an expose of 14 politicians of developing nations who, it said, had stashed their bribes in Swiss banks. The title of the expose in German read “Fluchgelder — Die Schweizer Konten der Dictatoren”. In English it meant, “Curse of money — The Swiss bank accounts of the Dictators”. Rajiv Gandhi figured in the expose as one with slush funds in secret accounts. Schweizer Illustrierte is not some rag. It is the Number One Swiss magazine and sells some 2,10,000 copies. Its readership is 9,18,000 — some 15 per cent of Swiss adults. The magazine had mentioned specific amounts in secret Swiss accounts of different leaders with their pictures alongside.

The report under the picture of Rajiv Gandhi, translated into English, read: "2.5 billion francs on the Indian secret accounts in Switzerland" of "Rajiv Gandhi, Indian". Today the amount of 2.5 billion Swiss Francs equals 2.2 billion US Dollars. But as Rajiv was no more by then, it must become the family inheritance. The other leaders captured by the magazine were: Suharto of Indonesia (25.5 billion), Haile Selassie of Ethiopia (22.5 billion), Mobutu of Zaire (6 billion), Shah Pehlvi of Iran (5.7 billion), Saddam Hussein of Iraq (800 million), and Nicolas Ceausescu of Romania (500 million). The figures of slush money mentioned were in milliarden (meaning ‘billions’) units of Swiss Francs. Had Rajiv been alive then, the expose would have caused a political tsunami in India.

The box item above shows the pictures and the amounts of the leaders as appearing in the magazine.

More than the slush money charge it is the family's silence about it, which is baffling. The number one magazine in Switzerland had made the damning charge that Rajiv Gandhi had left behind slush funds of $2.2 billion and yet the family has kept mum for 18 years now. How could any honest person tolerate such a serious charge? Well, one could say that the family might not have challenged it because it was published in far away Switzerland. But Dr Subramanian Swamy had included the Schweizer Illustrierte expose in his write-up “Do You know your Sonia?” in his party, the Janata Party, website, seven years ago, in 2002. It is still on the Party's website. Photocopies of the expose in the Swiss magazine are shown at pages 51 to 53 of Dr Swamy's write-up; also an e-mail from the magazine addressed to Dr Swamy on February 22, 2002 at page 50. The e-mail confirms what the magazine had reported. The e-mail reads: “Dear sir, We refer to your e-mail of April 4, regarding an article in our magazine Schweizer Illustrierte of November 11, 1991. In this article — Fluchgelder - Die Schweizer Konten der Dictatoren — is Rajiv Gandhi named with tot 2.5 Milliarden CHF on secret accounts. If you want the magazine please indicate the exact address.

Yours faithfully, Ringer Ltd.

Margot Todisco”.

The fax and telephone numbers of Margot Todisco are also given in the mail. The e-mail is in box alongside here. Yet no one from the Congress or from the family has sued Dr Swamy till date, nor challenged him. The Swiss expose also prominently figured in the advertisement that some NRIs had put out in the New York Times to protest against Sonia Gandhi when she visited the US in the year 2007. The Indian National Overseas Congress (INOC) filed a defamation case against the ad, expressly "not to defend itself, but Sonia Gandhi". The New York Supreme Court dismissed the case holding that only Sonia Gandhi, not the INOC, had the locus to sue. But she would not dare sue. Thus, neither in Switzerland where Schweizer Illustrierte exposed Rajiv's secret account with billions 18 years ago in 1991, nor in India where Dr Swamy had put it on his party's website seven years ago in 2002, or in the US where the NRIs had boldly advertised the expose two years ago in 2007, would the Gandhi family challenge the expose. In criminal law the conduct of the accused is an important piece of evidence. What does the family's conduct show here excepting that it has something to hide. SECOND: FAMILY BENEFITED FROM KGB, SAYS BOOK The second expose, Rajiv Gandhi figuring again, is that the first family of the Congress accepted political payoffs from the Russian spy outfit, the KGB. In a highly acclaimed book The State Within a State: The KGB and Its Hold on Russia-Past, Present, and Future by Yevgenia Albats, a journalist on Moscow News and Izvestia, the author writes: “A letter signed by Victor Chebrikov, who replaced Andropov as the KGB head in 1982, noted: the USSR KGB maintains contact with the son of the Premier Minister Rajiv Gandhi (of India). R Gandhi expresses deep gratitude for the benefits accruing to the prime minister's family from the commercial dealings of the firm he controls in co-operation with the Soviet Foreign trade organisations. R Gandhi reports confidentially that a substantial portion of the funds obtained through this channel are used to support the party of R Gandhi.” (p223) The author also cites the KGB letter and file reference. In Dr Swamy's write-up on Sonia, KGB’s letter in Russian is attached at page 45 and its English translation at pages 43 and 44.

The letter says that Rajiv Gandhi himself has admitted that “benefits” accrued to “the prime minister’s family” from commercial dealings through Russian co-operation. All major newspapers, The Hindu and Times of India included, had carried the expose on KGB payments. The book State within a State on KGB was published in 1994.

Yet, no one from the Gandhi family has challenged it for 15 years now. Dr Swamy had included it in his expose on Sonia on his party's website since 2002. Yet the family has not challenged him or sued him for seven years. It was again made part of the NRI advertisement in New York Times in 2007 when Sonia Gandhi visited the US.

Even then only a proxy case was filed to defend Sonia Gandhi's reputation which was promptly saying only Sonia could defend her honour, which she would not.

THIRD: BOFORS SLUSH PAYOFF TO ‘Q’ Ottavio Quottrocchi, the star actor in the Bofors scam, is indistinguishable from Sonia’s family. His association with the family is as old as Sonia’s.

Even Sonia Gandhi cannot dispute that Q got the first instalment of $7.3 million out of the total bribe of $36.5 million (Three per cent of the contract value of $1.2 billion) due to his front company for swinging the gun deal for Bofors. The slush money of $7.3 million was traced to Q’s account by the CBI which got it frozen some 20 years ago. But when the law was closing in on Q in early 1990s, the Congress government stealthily allowed him to escape from India. He turned fugitive, but his slush money had continued to remain frozen.

Sten Lindstorm, the Swedish police official who investigated the Bofors case for 18 years, wrote an article in 2004, saying that Sonia should be interrogated in the Bofors case, particularly on her family's relations with Q, on who introduced Q to Bofors and why did Bofors pay him for deal with India. This article had appeared in several media in India. Subsequently, the CBI, obviously under pressure, quietly allowed Q to smuggle away his slush money from the frozen account.

The UPA was in power then, with Sonia Gandhi as chairperson of the National Advisory Council and also of the UPA. Could this happen unless she had wanted it? She owes an answer to the nation. But, far from answering any question, she asked the media, as early as in 1999, to show evidence against Q, when the most clinching evidence, the loot caught in Q's frozen account, had fixed him conclusively. Yet, she defended him even after the Swiss court once, the Delhi High court twice and the Supreme Court finally held him part of the Bofor's fraud. And now, in the final days of its rule, her government has shamelessly let Q off the hook by removing his name from global red alert. Because of the red alert he was always in danger of being caught and sent to India. Now that's off. This move to free Q seems to be linked to the slush money issue rising in crescendo in this election. It seems to be in the larger interests of the family — she has to protect 'Q', if he has to protect the family. Otherwise just before elections no government will take the unpopular decision of freeing Q from India's legal net abroad.

QED: It does not need a seer to say that the first family of the Congress party is a suspect; a target for probe.

Who will probe its billions? Rahul Gandhi has told an election rally in Hyderabad, “elect us, we will investigate”. If that happens, the suspects will probe themselves!

EMAIL
comment@gurumurthy.net 

 

http://epaper.expressbuzz.com/NE/NE/2009/04/30/Photographs/009/30_04_2009_009_002_020.jpg Die Schweizer Konten der Diktatoren (Schweizer illustriete, in its November 11, 1991 issue exposed Rajiv Gandhi (bottom row, second from right) among 14 politicians from developing nations around the world.)

 

http://epaper.expressbuzz.com/NE/NE/2009/04/30/photographs/009/30_04_2009_009_002_019.jpg

 

 

http://epaper.expressbuzz.com/NE/NE/2009/04/30/photographs/009/30_04_2009_009_002_018.jpg

original message

from Todisco Margot (tod), ZO KKC (mailto:tod@ringier.ch)

Sent: Thursday, April 05, 2001 3:14 PM

To: swamy@fas.harvard.edu

Subject: Rajiv Gandhi

Dear sir,

We refer to your E-mail of April 4, regarding an article in our magazine Schweizer illustrierte of November 11, 1991. In this article – Fluchtgelder – Die Scbhweizer Konten der Diktatoren – is Rajiv Gandhi named with tot. 2.5 Milliarden CHF on secret accounts. If you want this magazine, please indicate your exact address.

 

Yours faithfully

Ringer Ltd.

Margot Todisco

Margot Todisco / KKC 1 phone¨+41 62 746 3831

Ringier AG fax: +41 62 746 35 71

Bruhlstrasse 5 <mailto:margot.todisco@ringier.ch>

CH-4800 Zofingen <http://www.ringier.ch>

 

http://epaper.expressbuzz.com/NE/NE/2009/04/30/ArticleHtmls/30_04_2009_009_002.shtml?Mode=1


Why It's Not Just About 5A5151516L & 5A5151516M 
04-05-2009 (S.Gurumurthy)

The ''Q'' accounts aren''t the target. The world is against secret stashing.

 

When L.K. Advani sent across what looked like a googly at the Congress on the issue of Indian black money in Swiss banks on March 29 just three days before the prime minister was to attend the G-20 meeting in London on April 2nd he would only have intended to put the party on the backfoot on an issue on which the Congress looked vulnerable. How his calculation has more than paid off and how the BJP has now on hand a powerful issue that may fix the Congress is the story ahead.

 

Advani did offer enough evidence on that day to demonstrate that the UPA government had shown perceivable disinclination to get at the Indian moneys abroad. Yet, he boldly counselled the prime minister, who was attending the G-20 meeting, to press the issue vigorously at the meeting, failing which, he warned, the BJP would make it an election issue. Imagine that the prime minister had rung up Advani that evening, told him that was precisely what he was intending to do at the G-20 meet and thanked Advani for drumming up public support for that! He would have hit the Advani googly out of the electoral arena. But Advani obviously knew that nothing of that sort would happen. The reason: the ruling dynasty. This issue, as everyone in the party knew, touched the First Family and its friends. The family's alleged involvement with Bofors kickbacks and Ottavio Quattrocchi and the way the UPA dispensation allowed 'Q' to get off the hook and also to snatch back the Bofors kickbacks held in frozen accounts point to more than just suspicion. Result? The Congress went so far back in defence that it crashed on its own stumps. Read on.

 

The usual, unprepared spokesmen pressed to take on Advani messed up the case even more. Manish Tiwari, a party spokesman, asked Advani not knowing that Advani had taken up the issue with the prime minister last year itself why raise it now, at the time of the elections? Advani had last year asked the prime minister to write to the German government to avail of its offer to give the names of non-German nationals who had secret accounts in LGT Bank to get the names of some Indians believed to have deposits in the bank. Abhishek Singhvi stepped in next. He said that G-20 was not the forum to raise the issue of secret money in Swiss banks and tax havens, totally unaware that in the preparatory G-20 meet held in Berlin in February, France and Germany had decided to raise the issue in the London meet.

 

Then came Jairam Ramesh. He questioned Advani's maths, which estimated loot from India into secret bank accounts abroad at between Rs 25 lakh crore and Rs 70 lakh crore. "You are a liar," he wrote to Advani, without knowing that the Swiss ambassador to India had himself confessed to NDTV Profit last year (on March 15, 2008) that a "lot of Indian black money flowed into Swiss banks". Also, the party manager did not read the correct version of the study of Global Financial Integrity, the organisation that had estimated the illicit Indian wealth stashed away abroad in just five years, 2002 to 2006 at some Rs 6.88 lakh crore. The organisation's study had validated the BJP's estimate of the loot.

 

Pranab Mukherjee and Kapil Sibal then stepped in and counter-charged that the NDA government had messed it all up by replacing the Foreign Exchange Regulation Act (FERA) with the Foreign Exchange Management Act (FEMA), which, they alleged, had increased the flow of illicit money from India. The BJP shocked them by reading out an article authored by P. Chidambaram in The Indian Express (in 2002), in which he welcomed the replacement of FERA with FEMA.

 

The BJP also cited the media report which said that instead of pressing the Germans for the names of Indians in LGT Bank's secret accounts list, the UPA government was advising the Indian ambassador in Berlin not to take the initiative and pester the Germans for details!

 

Somewhere in between, the prime minister counselled the people of India to read an article by a former advisor to the government in a Calcutta daily as a counter to the BJP challenge! There was more fun. Despite his family's enviable record in stifling the Bofors read the Quattrocchi case, Rahul Gandhi promised full investigation into Indian monies stashed abroad. When the Congress theatre was looking so disparate, desperate and comical, the other parties the CPI(M), the AIADMK, the Samajwadi Party and the BSP seemed more serious about the issue. They vowed in their manifestos, like the BJP did, to bring back Indian monies abroad, leaving the Congress in splendid isolation.

 

But the BJP seemed to have done perfect homework before raising the issue. As must have been planned earlier, Advani appointed a task force consisting of four persons Ajit Doval, a security expert; R. Vaidyanathan, an academic with specialisation in finance; Mahesh Jethmalani, a lawyer; and me, a chartered accountant with investigative experience to prepare the roadmap to recover the loot and advise the BJP. Advani released the task force's report in Mumbai on April 16. The constitution of the task force itself was a strategic move. On the dispute over how big is the loot, the task force silenced the sceptics thus: "...the maths of the loot may be disputed but the fact of the loot cannot be." Yet, the report was no partisan political document. It captured how the global situation has taken a U-turn after the economic crisis; how the West, which was celebrating financial secrecy as a sacred part of individual privacy, has started seeing it as evil; how western nations themselves now feel threatened by secret banking and tax havens; how they are determined to dismantle both; how no government in India, of any party, could have done much in the past; how the time is ideal for India now to join the global effort to track illicit monies; how India has been missing its opportunities and has given the impression that it was not keen on getting at Indian wealth stashed abroad; what India as a nation should do, and so on. The report also unveiled the global as well as the national strategy for India not for the BJP as such.

 

The principal advice of the task force was that the BJP must work for national consensus on the issue or build powerful opinion in the country. In line with its advice, Advani appealed to all to take up the issue as a national agenda. The BJP leader seems to have succeeded in raising the issue beyond electoral limits.

 

The media, too, seems to view it more as a national issue, though raised by the BJP. The Hindu, not a great friend to the BJP, has in an editorial titled 'A Major Issue on the Agenda', commented: "The recommendations of a task force appointed by the BJP's senior leader L.K. Advani on the steps to be taken to bring back funds illegally stashed away in tax havens by resident Indians are timely." It also seemed to endorse the task force on the volume of Indian wealth stashed abroad; also on how, despite a benign tax regime, the outflow of illicit monies has risen. Commending as "unexceptionable" some recommendations of the task force, the editorial concluded that "...bringing back the money stashed abroad will be an enormously time-consuming task but it needs to be attempted. Mr Advani has done well to highlight a key challenge that should be addressed by the new government that is to take office."

 

The financial daily Hindu Business Line, too, has in its editorial commented, "Whatever the outcome of the elections, the BJP will be remembered in history books as the first party to discover an issue to galvanise opinion not just across caste and community lines but also globally.Mr L.K. Advani's call for greater action against money stashed in Swiss banks and other tax havens, theoretically at least, raises the bar of the poll campaign and sets it in tune with the global attempts to collar countries that allow unaccounted money into a common course of action." The media undoubtedly sees potential in the issue.

 

The BJP, too, is playing the issue in a big way. For example, Narendra Modi, one of the principal architects of the Swiss money strategy, has conducted a novel poll among the electorate in Gujarat on the issue of Indian money in Swiss banks. Some 26 lakh people are reported to have voted in the poll, with 97 per cent supporting the move. Has the Swiss money issue turned into a major issue in this poll, which was seen as an issueless one? And has the BJP fixed the Congress on the foreign money issue, which the family-led party is vulnerable on? The BJP appears to have succeeded in both.

 

http://www.gurumurthy.net/articledisplay.pl?2009-05-04

 http://news.yahoo.com/s/nm/20090427/bs_nm/us_tax_usa_irs/print;_ylt=Ao4VLU5oiBrW5UYvzZ1A4TKb.HQA;_ylu=X3oDMTB1MjgxN2UzBHBvcwMxNARzZWMDdG9vbHMtdG9wBHNsawNwcmludA--

IRS says set to pursue "other banks" on tax evasion

By Tom Brown 

Mon Apr 27, 2009

MIAMI (Reuters) – The U.S. Internal Revenue Service (IRS) is preparing to pursue other foreign banks for allegedly facilitating tax evasion by wealthy Americans following its high-profile case against Switzerland's UBS AG (UBSN.VX) (UBS.N), an IRS official said on Monday.

UBS, Switzerland's largest bank, in February acknowledged that it helped U.S. clients conceal assets from the U.S. government. It agreed to pay a $780 million fine and identify some of its American clients.

But U.S. authorities are still going after the Swiss bank, seeking to access the data of another 52,000 Americans they say are hiding about $14.8 billion in Swiss bank accounts.

" We are developing John Doe summonses on other banks," Daniel Reeves, an agent with the IRS' Offshore Compliance division, told Reuters on the sidelines of a conference in Miami on offshore finance.

He was referring to the kind of subpoena filed by the IRS against UBS seeking to force the bank to turn over the names of clients suspected of evading U.S. taxes.

Reeves declined to say which, or how many, other banks could face cases filed by the IRS, but he confirmed the entities being investigated were foreign-based like UBS.

" We have identified other offshore banks that are engaged in similar activities," he earlier told the conference.

On April 2, U.S. authorities arrested and charged an accountant in Florida in the first of what they said could be a series of tax evasion prosecutions of American clients of UBS.

Almost two weeks later, a wealthy Florida yacht broker pleaded guilty to using an account with UBS to hide more than $3 million in assets from the U.S. government.

$100 BILLION EACH YEAR

The IRS has pushed ahead with the prosecutions at a time when political leaders both in the United States and elsewhere are calling for a crackdown on tax havens and offshore centers where individuals and companies can hide away funds.

" In the U.S., we're losing about $100 billion a year, because of tax evasion and other abusive practices," Robert Roach, counsel and chief investigator for the U.S. Senate Permanent Subcommittee on Investigations, said at the Miami conference.

This Senate subcommittee has been lobbying for more aggressive official action against tax havens and tax evasion, which Roach described as a " rats' nest of problems".

Switzerland, which is seeking to defend its long-standing tradition of strict bank secrecy, asked the United States at the weekend to drop the case against UBS in return for a new tax accord the two countries are about to negotiate.

Swiss President Hans-Rudolf Merz said the request was made to U.S. Treasury Secretary Timothy Geithner on the sidelines of the International Monetary Fund's semi-annual meetings in Washington.

(Reporting by Tom Brown, Writing by Pascal Fletcher; Editing by Kenneth Barry)

India’s curse of ‘black money’

 

By Raymond Baker

 

Published: April 23 2009 (Financial Times) 

 

India’s opposition party leader L.K. Advanisparked a political conflagration with pre-election campaign remarks that India was losing tens of billions of dollars each year in illicit financial outflows, or “black money”. He asserted that the National Democratic Alliance would vigorously pursue recovery of these lost assets if voted into power. With the rolling election now in progress, the issue of India’s missing billions has grown progressively thornier, as both sides vie to take the moral high ground.

 

Whatever the outcome of the election, India’s problem has broader implications both for the developing world and for efforts by the Group of 20 developed and developing nations to craft an effective post-crisis economic plan for the global financial system.

 

In his discussion of black money, Mr Advani cited our estimates of illicit capital flight,which suggest total illicit outflows from the developing world of $1,000bn (€766bn, £684bn) a year. India ranked fifth highest at $22bn-$27bn a year, coming in behind Russia ($32bn- $38bn), Mexico ($41bn-$46bn), Saudi Arabia ($54bn-$55bn) and China ($233bn-$289bn).

 

Mainland China’s massive outflows were predominantly the result of trade mispricing – a common practice whereby multinational corporations manipulate figures on commerce and earnings to minimise tax liabilities. A popular means of tax evasion for companies, trade mispricing is the driving force behind most of the illicit capital exiting developing countries.

 

Second-ranked Saudi Arabia and fourth-ranked Russia were exceptions to the trade mispricing rule because of their status as oil exporters, oil being difficult to misprice.

 

The proceeds of criminal activity, corruption and corporate tax evasion, these flows are clandestine in nature and usually end up in financial centres featuring low regulation and high secrecy. This makes it tricky to study illicit financial flows.

 

India is the latest of several nations to raise the alarm about illicit capital flight.Following high-profile scandals involvingLiechtenstein and Switzerland, the Group of 20 nations has demanded greater co-operation in tackling the shadow financial system. Made up of tax havens, jurisdictions allowing secrecy, disguised corporations, anonymous trust accounts, fake foundations and assorted money-laundering mechanisms, it is designed to move money and obscure its sources.

 

What have thus far remained absent are the concrete reforms needed to dismantle this shadowy network and enforce greater transparency and accountability in the global financial system. The G20 is poised to accept the Organisation for Economic Co-operation and Development standard for exchange of tax information, a well-meaning but weak approach to the problem. While the much-publicised post-G20 arrangements by several havens to sign tax information exchange agreements are welcomed, these agreements are extraordinarily cumbersome. The onus remains on the requesting nation to prove that the information sought is “foreseeably relevant” to suspected crime or tax evasion.

 

Furthermore, havens and jurisdictions supporting secrecy are not required to provide information they do not normally collect. Under the OECD standard, all elements of the global shadow financial system can remain in place.

 

What needs to happen now is for the G20 to broaden its dialogue on information exchange agreements, inter national co-operation and international financial protocols. Most effective in curtailing the massive illicit outflows from developing countries would be a requirement for automatic cross-border exchange of tax information on personal and business accounts and country-by-country reporting of sales, profits and taxes paid by multinationals.

 

As world leaders and high-level stakeholders meet this weekend in Washington, the question of India’s black money should be considered as a sign of what lies ahead. The global recession is expected to have a severe impact on developing economies and undo years of poverty alleviation efforts and economic gains.The desire to offset this predicted impact is sincere. But until efforts are made to dismantle the shadow financial system and mandate more co-operative and rigorous reporting, success will remain as elusive as India’s missing black money.

 

India has shown that this issue resonates with voters. Politicians in other developing country democracies would be wise to take note.

 

The writer is director of Global Financial Integrity

 

http://www.ft.com/cms/s/0/1fdc10ac-303c-11de-88e3-00144feabdc0.html?nclick_check=1

Rs 70 lakh crore black hole

Aditya Sinha

 

First Published : 25 Apr 2009 02:06:00 AM IST

Last Updated : 25 Apr 2009 07:49:27 AM IST (New Indian Express, April 27, 2009)

 

"Mystification” is how the additional solicitor general felt about a petition in the Supreme Court, filed by several eminent Indians, seeking recovery of perhaps Rs 70 lakh crore of black money in secret Swiss bank accounts. Gopal Subramaniam was mystified by the petition’s timing; he perhaps sees BJP prime ministerial candidate L K Advani’s promise of a 100-day plan to retrieve that black money as being an election gimmick.

 

His suspicions were echoed by the Congress party’s candidate for Leader of Opposition, Rahul Gandhi, who promised voters in Hyderabad an enquiry. “The BJP would forget their promises of unlocking the money from Swiss bank accounts because they know there was no such money anywhere,” young Rahul thundered, mystifying listeners about what exactly would be enquired — the very fact of black money or the BJP’s sincerity. In any case he did not promise to bring back any money from abroad.

 

Congress strategist Jairam Ramesh has gone from blue-eyed to cross-eyed over the amount that Advani claims was salted away between 2002 and 2006. Research by Advani’s task force suggests it could be Rs 70 lakh crore, the higher end of estimates in the Global Financial Integrity report of the Washington-based Centre for International Policy; Jairam cites the lower end of those estimates, about Rs 14 lakh crore. That still seems like a hell of a lot of money.

 

Jairam also coyly proposes that the negative flow in India’s capital account suggests a reversal of capital flight — meaning that people are stashing their black money in India. So that’s why we had participatory notes for foreigninvestors! Now it all makes sense. The UPA was trying to turn India into a nuclear-powered Swiss bank. Thank God for the global economic slowdown.

 

Even the man behind the PNs, P Chidambaram, whose IQ is higher than the Sensex (in contrast to those politicians whose IQs are lower than the current dollar price of crude oil per barrel) is mystified. He wondered in Sivaganga whether Advani’s 100- day action plan was a smokescreen: “I wonder whether he is unwittingly alerting those who have deposits abroad to re-arrange their affairs in the next four weeks before a new government is sworn in.” So Chidambaram is accusing Advani of both deliberation (by fiendishly setting up a smokescreen) and inadvertence (by unwittingly alerting those with foreign piles). He is like a sophist on steroids. Also, he should be careful lest someone alert his boss Sonia Gandhi that he is going around openly declaring that these are the Congress party’s last four weeks in power, and that the UPA will be handing the reins of government to someone else.

 

Congress spokesperson Kapil Sibal is another brainy guy, but he refuses to succumb to mystification. Rather, he scoffs at Advani’s plan as he believes that Advani does not know the legal procedure for getting black money back from Swiss banks.

 

That’s like saying that Advani cannot file his tax returns because he does not know how to fill out the form. It also appears to ignore one minor event in London at the beginning of this month: the G20 meeting.

 

You may recall that the G20 decided to crackdown on tax havens by agreeing to fix the loopholes that currently exist around hedge funds and tax havens. This has come shortly after America’s threats to UBS of Switzerland to reveal the estimated 52,000 accounts held by Americans. The US said that about $15 billion dollars of untaxed money were held in the Swiss bank.

 

Our tax laws may differ from the USA’s, but it appears that there is a new global political will to end this convenience for the fabulously wealthy, and that there will be concerted legal action to do so. Even if India does not have the requisite legal tools, formulating new ones will not be difficult in the new global environment.

 

What is common to all the statements by this galaxy of Congressmen is the accusation that the BJP is looking to derive political mileage from the promise of a 100- day action plan; that the NDA government did nothing about recovering black money during its tenure; and that the retrieval of black money is a minor derivative issue, meant to detract from weightier issues that confront the nation.

 

It may well be that talk of recovery of such monies will not generate the wave of votes that can propel the BJP into power.

 

It appears that most voters, and even those who are paying attention, do not comprehend the enormity of the sum involved; eve n i f we see the number 7,00,00,00,00,00,000, we do not understand it. If they do not understand it, how can it become an emotive issue for them? Yet the reason that Advani has mooted it, and why Rahul is dismissive, is that for their parties these elections are a neck-andneck race. Every incremental gain is unquantifiable but necessary if the final tally of each party is to be pushed up, piecemeal, to 150 seats or more. Hence emotive or not, each issue is a worthwhile pursuit. The argument that it is politically motivated is nonsensical, because all policy initiatives in a democracy must be politically motivated.

 

Elections are the best time to test a policy proposal; it is when you have people’s attention, and when the politician’s patience with voters is inexhaustible. The world’s most successful politician currently is Barack Obama, and it was during his gruelling campaign that he fine-tuned or fleshed out many of his ideas and policy proposals. In this context, any accusation of gimmickry sounds more like “sour grapes”.

 

It is equally misguided to say that the BJP will drop its proposal on May 14, the day after the last round of polling, or to wonder why nothing happened during the tenure of A B Vajpayee. If the BJP does forget this promise, it will not be the first party in India or abroad to do so, but that seems unlikely given the kind of research already put in by Advani’s task force. As to why nothing happened during the Vajpayee tenure is tantamount to wondering why Vajpayee did not solve the Kashmir issue.

 

Whatever be the many reasons, does it mean Advani should not try to resolve it? Certainly there are weightier issues confronting the nation, but it appears that all parties have made their broad ideologies clear in these elections, and what remains are their details of proposed governance.

The BJP has promised to honour the nuclear deal with the USA, another issue that carries no emotional weight with voters (as evidenced by the Congress party’s campaign amnesia on Manmohan Singh’s single achievement in five years), but it is another detail that sharpens the image of the party in the voter’s mind. Congressmen may suffer mystification, but it is certain that the Indian voter does not

 

editorchief@epmltd.com

About The Author:

Aditya Sinha is the Editor-in-Chief of The New Indian Express and is based in Chennai.

reading the lying lips of chidambaram; loot in tax havens

Interview with ht:

April 25, 2009-04-25

Chidambaram detailed the measures the UPA has already taken to rubbish the BJP’s promise of bringing back Indian wealth stashed in foreign banks. “I challenge Mr Advani to name one step the NDA took between 1998 and 2004 when it was in power to bring back black money. They did not do anything,” he said. During his stewardship of the Finance Ministry, the UPA made “substantial progress” towards unearthing Indian wealth in secret foreign accounts, he claimed.

“Read my lips. We’ve made substantial progress…I am not at liberty to disclose details as some procedural formalities are still underway,” he said.

 

http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=HomePage&id=eaa79f0b-6cd7-4c2e-93b0-503dfdce2dde&Headline=China+is+fishing+in+troubled+waters+in+Lanka:+Chidambaram

Guwahati, april 25, 2009 (Bhaskar roy, TNN)

 

There is a lot of noise about a massive amount of black money stashed away abroad. 

Manmohan;
Let me say that black money has to be brought back through a well-coordinated programme. But if you are advertising before taking any step, it gives black marketeers an opportunity to stash away, re-arrange their portfolios in a manner that it will make it difficult to unearth black money. I am not denying the existence of such black money abroad. How much in Swiss banks, how much in tax havens, its magnitude — no one knows about it. We will take definite steps within 100 days (of the new government) to recover this black money. We argued within a group of friendly countries to find a way out. As far as the government of India is concerned, we talked to some other countries for absolute transparency within the banking system, for an international agreement to share information between tax authorities. We will follow it up, for us it is a priority to find out if portfolios have been maintained by dubious players. 

 

By R Guhambika 
24 Apr 2009 02:26:00 AM IST (new indian express)
congress leaders amassing wealth in swiss banks using participatory route.

‘Only BJP-led govt can solve Lankan problem’ 

CHENNAI: Speakers at an election rally, organised by the BJP-led front here on Thursday, asserted that only a government headed by L K Advani would be able to find a solution to the Sri Lankan Tamils’ problem. Parties like the DMK and AIADMK could merely issue appeals to the Centre on the issue, they said.
Appealing to the large gathering to vote for BJP candidates, State unit president L Ganesan (South Chennai) and Dr Tamilisai Soundarajan (North Chennai), the party’s election in-charge for southern states, M Venkaiah Naidu, said scores of Sri Lankan Tamils were being massacred and Chief Minister M Karunanidhi, who was helpless on the issue, was sending telegram after telegram to the Centre. 
On the bandh call given by the DMK government, Naidu wanted to know whether it was directed against Prime Minister Manmohan Singh or the United Progressive Alliance, in which the DMK was a member. 
Janata Party president Subramanian Swamy alleged that several Congress leaders had amassed huge funds in Swiss banks using the ‘participatory note’ route. On the Ram Sethu issue, he said his party was not against the Sethusamudram project but only sought realignment of the proposed canal.
BJP’s Ramanathapuram candidate S Thirunavukkarasar said among all leaders only Advani had a firm grasp of the myriad problems facing India and the capacity to solve them.
Refuting the charge that the BJP was a communal party, All India Samathuva Makkal Katchi president Sarath Kumar said the Dravidian parties in the State had used the saffron outfit whenever it suited them. Both the AIADMK and the DMK were at one time aligned with the BJP.
All India Nadulum Makkal Katchi president Karthik said while there were several contenders for the PM’s post in other fronts, the NDA was united under Advani’s leadership.
P T Kumar of Dravida Vizhipunarchi Kazhagam, Rajasheker of Janata Dal (United), Nagaimugan of Bharatiya Forward Bloc and Suba Sethuram of Communist Leninist Party were among those who spoke. 
http://tinyurl.com/cmh6dd 

‘Good time to get back black money’ 

Mail Today Bureau

New Delhi,  April 14, 2009                                                                                              

                                                                                                                     

The global financial meltdown has presented India with an unprecedented opportunity to track and bring back some of the estimated Rs 75 lakh crore ($ 1.5 trillion) illegally salted away by Indians in Swiss banks over the years.
R. Vaidyanathan, who has tracked illegal funds flow out of India, said this on Monday.
This needed political will which appeared to be lacking, said the finance and control professor at the Indian Institute of Management- Bangalore (IIM- B). He is considered to be an authority on global funds flow and sits on several official committees.
The Organisation for Economic Cooperation and Development (OECD) has estimated that more than Rs 750 lakh crore was parked in tax havens. This is eleven times the total amount committed by the G- 20 leaders to revive the global economy.
Vaidyanathan said the current situation was ideal for India to “seriously pursue” unaccounted wealth parked abroad by Indian nationals and companies. He was delivering a lecture on ‘Tax havens and illegal funds of India’ at the Vivekananda Institute here. “The financial situation is grim even for some developed countries. So, they have been putting pressure on Switzerland and other tax havens to disclose details of accounts held secretly there,” he said. “The US loses an estimated $100 billion (Rs 5 lakh crore) through unaccounted funds flow every year. In normal times, that would be ‘pocket money’ for the US government. But now, they are serious about tracking this down,” he added.
The global crackdown on terror has also been a factor. With terror financing using the same routes and tax shelters, governments are “much more willing” to cooperate with law-enforcement and tax authorities, he said. Why Switzerland, out of the 74 tax havens identified by tax and law enforcement authorities worldwide? “India has a traditional affinity for Switzerland. Besides, it offers profound secrecy and strict privacy laws.” said Vaidyanathan, who has been tracking black money flows in and out of the country since the mid-1990s.
He estimates that over a third of illegal funds parked abroad by Indians is still in Swiss banks. With Swiss authorities now coming under pressure from the US and other OECD nations like Germany, France and a “reluctant” UK, India can easily prevail on Swiss authorities to disclose the names and details of account holders there, he said.
For instance, Swiss conglomerate UBS has, as a result of recent pressure, decided not to ask its executives to travel to other countries for “wealth management” services. But, UBS — recently fined Rs 55 lakh by Securities and Exchange Board of India for not disclosing details of its participatory note members — has a full- fledged set- up in India. “Britain is both accuser and culprit. It has several tax havens under its jurisdiction. Almost all of their judicial systems are based on British common law,” the professor said.
The list of tax havens runs from Andorra to Vanuatu. Significantly, India never figured on any list as a tax haven, he said.
Vaidyanathan said he has shared all these details with various government agencies in India over the years. But “nobody did anything with it.” Instead of investigating, the usual response has been to demand details. “I am only an academic,” he said.
Vaidyanathan was one of the “experts” who had been tapped by BJP leader L. K. Advani while raising the issue of getting back Indian money in Swiss banks.
The major routes used were under- invoicing / over- invoicing of exports and imports and getting the balance stored abroad.
Kickbacks from major defence / civilian contracts, smuggling of gold and currency, and hawala funds were other sources.

Money earned by artists and athletes abroad was another source, he added.
          

 http://businesstoday.intoday.in/index.php?option=com_content&task=view&id=10942&sectionid=4&issueid=54&Itemid=1

India’s silence over tax havens, a concern

By By Olga Tellis

Apr 08 2009

THERE HAS been a lot of excitement generated by the G-20s’ pledge to take action on the tax havens.

The US and Germany were in the forefront making this demand. Germany had earlier got the names of 1,400 clients of the Liechtenstein-based LTG bank, who had parked their monies with the bank. The money in tax havens is money that is basically sent out to evade taxes.

Of these 1,400 names, about 600 were Germans. One does not know what Germany did with this information but that such information can be had is interesting. India could get the Indian names in that list if it wants.

India and tax havens

India has been conspicuously quiet on this issue.

Perhaps, she does not have much of a leg to stand on because this ‘black wealth’ is permitted officially to come in through the Mauritius route, tax free of course.

It is also permitted through participatory notes (PNotes), and that’s why there was a tremendous uproar in powerful circles when there was a curb put on PNotes by the Securities and Exchange Board of India.

The money in Swiss banks has always been a concern in the country but it has now got muscle because of the G20 stand.

In India, the BJP has taken up the issue in its election manifesto.

It has said that if it comes to power it will try and bring back the Indian money lying in the Swiss banks.

As a measure of its seriousness, it said it would form a task force that would include Prof. R Vaidyanathan, professor of finance at the Indian Institute of Management, Bengaluru.

Colossal flight

Mr Vaidyanathan has done a lot of work on this subject. Quoting from the Global Financial Integrity study, he said in an interview to Rediff that the average amount stashed away from India annually during 2002-06 is $27.3 billion (about Rs 136,466 crore).


It means that during the five-year period the amount stashed away is 27.3x5=136.5 billion (about Rs 692,328 crore).


Around $45 billion out of this is in Swiss banks.

What does this astronomical amount stashed away in Swiss bank accounts mean for the Indian economy?

One did a back of the envelope calculation and gathered that this amount could have become Rs 2,60,000 crore in 2009.

Had this money been available to India, the taxman could have collected around
Rs 86,697 crore with minimum tax.

This revenue could have financed 27 per cent of the country’s fiscal deficit, which is Rs 3,26,515 crore.

The amount in tax havens also amounts to 5.2 per cent of the country’s GDP which is around Rs 50 lakh crore.

http://www.deccanchronicle.com/dc-comment/india’s-silence-over-tax-havens,-concern-721   

India's politicos dangle US$1 trillion hope

By Raja Murthy (Asia times, 24 april 2009)

MUMBAI - India's general election, which runs from April 16 through to the middle of May, is bringing out a streak of political self-righteousness that is exposing more than the hypocrisy that pervades a ruling elite whose position of power is dependent on the poverty-stricken masses. 

The battle for votes is shedding light on wealth spirited out of the country and tucked away in Swiss banks and similar secretive hideaways. Businessmen, politicians and others living in India, the world's biggest democracy and home to one of the fastest-growing economies, have stashed away over the years a staggering US$1.3 trillion, according to a public interest petition filed this week before the Supreme Court. The petitioners sought judicial intervention to direct the government to seize the overseas loot. 

Chief Justice K G Balakrishnan headed a Supreme Court bench that heard the petition on April 22, the first time such a lawsuit has reached the country's top court. 

If this money is brought back, each Indian village could get $2.3 million for development, opposition politicians say. That might be rather optimistic - the petitioners' $1 trillion-plus figure represents dirty money accumulated over four decades. Even so, the Washington-based Global Financial Integrity Project says India suffers from the illegal outflows of $22 billion to $27 billion every year. 

Global Financial Integrity (GFI) was launched in September 2006 "to promote national and multilateral policies, safeguards and agreements aimed at curtailing the cross-border flow of illegal money", according to the project's website. 

India is not alone in suffering from such outflows. According to GFI, for every $1 poor nations receive in foreign aid, $10 in dirty money flows illicitly abroad. It says terrorist groups and drug cartels are the biggest beneficiaries of this dark economy. Efforts to counter the outflows are having little impact. 

"Global corruption has not diminished despite 10 years of effort," a GFI report notes. [1] "Assets now stashed in tax havens around the globe are estimated at $11.5 trillion, and non-bank cash deposits outside the country of origin are rising." 

Asia accounts for about 50% of illicit financial flows from developing economies, according to Professor R Vaidyanathan, a finance faculty member at the Indian Institute of Management,Bangalore, and a visiting Fulbright Scholar in Corporate Finance at the University of Illinois in the United States. 

India's political classes are suspected to account for much of the black money, some of it tucked away to avoid tax, and so far a cynical general public appears unimpressed by the efforts of politicians to pose as concerned retrievers of this cash. 

The petitioners pleading to the Supreme Court are led by former Indian law minister Ram Jethmalani. Already a controversial lawyer and still a politician, Jethmalani suffers credibility problems after having had as his clients India's biggest stock market scamsters, Harshad Mehta and Ketan Parekh. 

Respondents to the petition include India's central government, the Reserve Bank of India, stock exchange regulator the Securities and Exchange Board of India, the Directorate of Enforcement - whose functions include enforcement of laws such as the Foreign Exchange Management Act 1999 and Prevention of Money Laundering Act 2002 - and the chairman of the Central Board of Direct Taxes. 

While the sight of politicians falling over each other vowing to get back the loot if voted to power is possibly more mind-boggling than the unconfirmed, gigantic quantity of the muddy money they are chasing, of more immediate interest to the Indian electorate is who stashed away the funds in the first place. 

Money and elections are as inseparable as pizza and cheese, but unlike in, for example, the US where electoral funding rules are detailed, the process for funding Indian elections is dangerously hazy and unspecified. While candidates are required to divulge their wealth and assets to India's Election Commission, how they first acquired this wealth is not necessarily made clear. 

Rich individuals, the source of their wealth often swathed in mystery, appear all over the Indian political landscape. The second phase of general election voting, starting on April 23, fields 288 candidates considered to be crorepati the sub-continental equivalent of millionaire, the name derived from one crore, or ten million, rupees - about US$197,500. 

The first phase of voting, on April 16, featured 198 crorepatis, according to election watchdogs such as the New Delhi-based National Election Watch (NEW), a nationwide campaign involving 1,200 non-governmental organizations pushing for electoral reforms. NEW says it studies information that candidates provide to the Election Commission. 

Past governmental efforts at tracking black wealth have been half-hearted at best. "Given facilities such as online banking, hiding black money these days is much more difficult," says Ramesh Kumar [2], an accountant with 19 years of experience in various companies. "If governments are serious, it should be a relatively easy matter to track down black money. The problem is that corruption reaches from top to bottom, as when a single bribe is shared among many in the ladder." 

Successive Indian governments have been part of the problem of not pursuing illegal money hoarders. The German government last year offered to reveal names of slush-money account holders in Liechtenstein, a tax haven in Western Europe. Germany's overseas intelligence agency, the Bundes Nachrichten Dienst, or BND, acquired a compact disc with names of 800 secret account holders in LTG, a Liechtenstein bank. The incriminating disc fell into BND hands during an undercover operation to unearth German tax evaders. 

Countries such as the US, Britain, Canada, Italy, Norway, Sweden, Finland and Ireland reportedly took up the German government offer. Critics said the Indian government declined to react because powerful people including politicians, media barons, corporate chieftains and leading stockbrokers, are in the dirty-money list the German government discovered. 

The Indian government's approach to black money contrasts starkly with the US, Vaidyanathan, of the Indian Institute of Management, said. For instance, the Swiss wealth managementfirm UBS in February this year paid a $800 million fine to the US government for withholding details of American account holders. But UBS actually paid the Indian government a small fee for reserving the right not to disclose names of its Indian account holders, Vaidyanthan said. 

"Germany, France, the US are all exerting pressure [to get back black money]," Vaidyanathan told Asia Times Online. "Hence India also should join this effort to get its funds." The issue is not a new one for Vaidyanathan, who has been writing and talking about dark wealth since 1990s. "My finance courses at IIM - Bangalore included the issue of tax havens for a long period." 

"There are more than 70 tax havens in the world, but as theInternal Revenue Service of the US reveals, around 40 of them aggressively market themselves," Vaidyanathan said. "Some have gone so far as to offer asylum or immunity to criminals who investsufficient funds." 

Additional Solicitor General Gopal Subramaniam told the Supreme Court on April 22 that the government was not asleep on the black money issue. The government promised to file an affidavit within 48 hours stating what steps it had taken to bring back funds from banks in Switzerland and elsewhere. 

Even so, as the volume of claim and denial in the black-money drama rises, it is sounding more hollow than convincing. Opposition politicians, who started the latest act in the drama, have so far forgotten to explain why they did nothing to recapture the funds when they were running the government. 

Notes 
1. The GFI, now a standard reference for economists studying the flow of black money worldwide, is run by the Center for International Policy, which, though openly promoting worldwide pro-US foreign policies, says it does not accept US government funds. Individuals and 25 foundations, including the Ford Foundation, give it donations. 
2. Real name withheld on request. 

 

http://www.atimes.com/atimes/South_Asia/KD24Df07.html


Bad show
The Congress is in danger of losing the perception war in the general elections, says N.V.Subramanian.
 
 
 
Example 3: The virulence of the Congress's attack on L.K.Advani for demanding the return of black money stashed in European banks does no good to the Congress's image. Poking fun at Advani, or calling him names, as a former Congress junior minister is wont to do, does not counter the perception that the party and its government have something to hide. Indeed, it reinforces it.
 
The Congress hoped to befuddle Advani by bringing P.Chidambaram into the attack, but the BJP has lined up the redoubtable Arun Shourie. Against Shourie, the Congress has no hope of winning the perception war, especially if it has a scandal to hide.
 
 
N.V.Subramanian is Editor, NewsInsight.net. He has authored two novels, University of Love (Writers Workshop, Calcutta) and Courtesan of Storms (Har-Anand, Delhi).
 
 
Please visit N.V.Subramanian's blog http://courtesanofstorms.blog.com/
 
 
Please read the Article at :
 

I will add only one explanatory note to this brilliant and lucid expose by Vaidyanathan. $1.5 trillion = Rs. 75 lakh crores (at Rs. 50 per dollar). If this money looted from Hindusthan and kept in tax havens is brought back to Hindusthan, Rs. 1 lakh can be distributed to each of 75 crore Hindusthanis, because it is the money which belongs to the latter. 


I agree with Vaidyanathan. We have to debate this well and get the distribution done in quick order. The eloquent Tamil proverb is: muzhu poosanikkaaye sottile maraikka mudiyumaa? Translation: Can an entire pumpkin be completely hidden in a katori of curd rice?


Let us hope that SC comes to grips with the loot on May 4 which is the date of the next hearing on the PIL. In this PIL, a directive has been sought from the SC to the Centre, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Enforcement Directorate and Central Board of Direct Taxes to get back, what they referred to as, "stolen property", the petitioners said the colossal failure to take action on this issue was due to the fact that "influential politicians in most of the political parties are involved in the offences in question". 


Will the Centre, RBI, SEBI, Enforcement Directorate and CBDT join the debate?


Kalyanaraman

Illegal Indian money in tax havens: The way we debate it 

R Vaidyanathan (DNA, Thursday, April 23, 2009 3:02 IST)

Eloquent silences & obfuscations mark media coverage of this issue

The debate, or the lack of it, in recent days, on the important issue of our illegal money kept in Switzerland and other tax havens, has been rather interesting.

Many in the mainstream media have kept quiet, with hardly an editorial or analysis. TV channels, particularly the business ones, are silent. The Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry, which lobby for the interests of big business, are observing eloquent silence, too.

In the last few months, global newspapers, particularly the business publications such as Financial Times, Wall street Journal and The Economist, have been full of articles and analyses about tax havens and the determination of the USA and other Organisation for economic Cooperation and Development (OECD) countries to tear off the veil of secrecy over these tax havens, particularly Switzerland.

 

I have been following these developments for 15 years now. I have been arguing against tax havens and suggesting that we make plans to get our money back. I have also included this as a module in my finance course for many years. The latest is my column in this paper on March 4 on bringing back our illegal money from Swiss banks.

I now find that the CPI(M) in its manifesto has included the issue of our illegal funds in foreign tax havens and so have CPI, JD(U) and SP. BJP has also included it in its manifesto and LK Advani has even held a press conference on it.

After all this, one would have expected a major informed discussion on this vital issue. However, it has taken peculiar turns in our politically twisted atmosphere.


The political reactions first.

 

The Congress spokesperson has castigated Advani for raking up the issue now, instead of when he was in power. Perhaps the spokesperson is not aware of the fact that the global atmosphere regarding tax havens has dramatically changed in the last few months.

 

World attention was drawn to this issue after Germany stole data from LGT bank of Lichtenstein and got a long list of tax evaders including that of the head of German Post. 
Then followed severe action from the US government against UBS, the largest Swiss bank, after which the latter agreed to part with details of tax evaders and to pay a fine. The OECD has published a list of these tax havens and categorised them according to the level of non-cooperation. The Obama administration is working on a legislation to deal a severe blow to these tax havens.

 

But see how absurd our political reactions have been. Congress spokesperson Abhishek Manu Singhvi said India could not discuss this item at the G20 meet on April 2 since it would be "out of line." This was when the major item on the agenda was dealing with tax havens.

There have been some articles in newspapers, too. One was by Ashok V Desai, who called the money "Advani's mythical trillion." Given his political orientation and bias towards big business, this was not unexpected. But what was shocking is the obfuscation of issues by bringing in the role of NRIs and their money.

Discussions on Indian illegal money in Switzerland do not involve NRIs and their deposits. But Desai makes absurd suggestions like 20 million NRIs making $25,000 per annum and a portion of it in Switzerland, etc. If the NRI is in USA or Norway, he will have his bank accounts in those countries --- why on earth in Switzerland?

Anyhow, we are debating not about the NRIs but about the resident non-Indians (RNIs) who have accumulated wealth in Swiss banks. Desai seems to be oblivious to the under invoicing ---over invoicing of exports or imports; commission in large projects or defence deals, etc in spite of being an "astute and expert" observer of the Indian scene for so long.

The following news items may illuminate him.In the first, a business news channel showed the Swiss Ambassador to India telling reporters at an event to commemorate 60 years of the Indo-Swiss Friendship Treaty, "Switzerland was accused of giving shelter to black money and there has been a lot of inflow of such wealth from India and other countries of the world... I would not say it would be stopped 100% (under a new law). But through this measure, it would be controlled up to a certain limit."

In another, a report in a business newspaper recently stated, "Swiss private bankers are likely to reduce their exposure to wealthy Indian clients as they cut down their discreet banking services in countries like Germany, France and the United States, analysts say. As the worldwide crackdown on tax evasion gathered momentum following the recent G-20 meeting in London, several Swiss banks, including UBS, which is the world's largest manager of private wealth assets, have issued travel directives to their "client-facing" staff not to visit foreign countries for carrying out what are called offshore wealth-management banking services. UBS, for instance, has asked its wealth management staff not to travel abroad to meet clients."

The report quoted Serge Steiner, a UBS executive, as saying this will also apply to India. "However, UBS India will continue to service wealth management for Indian clients," Steiner said. In effect, it would be a complete onshore (domestic) activity unlike the UBS wealth management staff descending from Singapore to service rich Indian clients."

Going by the report, Swiss banks currently manage around $2 trillion offshore assets of clients from various countries.

UBS, which is now mired in a major legal dispute with the US tax authorities, has passed information of over 300 accounts of wealthy American clients to the US Internal Revenue Service. But the IRS is not satisfied with UBS and wants the Swiss bank to provide information on some 52,000 American clients. Besides, two UBS bankers were arrested in the US on the ground that they were involved in tax fraud.

Consequently, UBS and other Swiss private banks are preparing ground to reduce their exposure to offshore banking services in a move to avoid further difficulties for the bank. Other Swiss private bankers too have been discreetly cautioned not to undertake visits in the wake of growing pressure from the G-20 leaders, especially Germany and France, who seem determined to pry open the secret tax havens. But a representative of the Swiss bankers association said there was no general directive to private bankers in Switzerland, suggesting that it is up to each individual bank to decide their foreign travel.

A surprising reaction was that of Bibek Debroy. In an article on April 3, the erudite and scholarly Debroy talked about pricing the loot and suggests the difficulties involved in the same. He used the Global financial Integrity (GFI) report but unfortunately looked only at the summary version.

In their website (http://www.gfip.org/storage/gfip/executive%20-%20final%20version%201-5-09.pdf), a detailed report is available (Illicit Financial Flows from Developing Countries: 2002-2006, authors Dev Kar and Devon-Cartwright Smith --- A project of Ford Foundation). Page 30 of the full report gives a clearer picture for India.

Financial flows in the context of this report include the proceeds from both illicit activities such as corruption (bribery and embezzlement of national wealth), criminal activity, and the proceeds of licit business that become illicit when transported across borders in contravention of applicable laws and regulatory frameworks (most commonly in order to evade payment of taxes).

In 2006, the most recent year of the GFI study, developing countries lost an estimated $858.6 billion to $1.06 trillion in illicit financial outflows.

According to the report, the average amount stashed away from India annually during 2002-06 was $27.3 billion, which works out to $136.5 billion over the five years (page 30 of the Ford Foundation Report). It is not that all this money went to Swiss banks, but to different tax and secret shelters. The share of Swiss banks in dirty money from India is at least a third due to historical and geographical reasons. Some $45 billion out of the $136.5 billion stashed away from India would have been hoarded in these five years in Swiss banks.

Notably, this figure is only for five years. More money was stashed away during the Nehruvian socialist regime. So, the loot for 55 years preceding 2002 would be several times the about money. In fact, in those days, the Indian rupee commanded a better value per dollar. So, fewer rupees could get more dollars. Hence the estimation that the Indian money stashed away may be of the order of $500 billion to $1.5 trillion.

Not only that. 'The International Narcotics Control Strategy Report - Money Laundering and Financial Crimes - March 2009' by the US department of state suggests that 30-40% of the inflows may be by Hawala market --- not accounted. During 2007-2008, according to that report, formal inflows into India were $42.6 billion and so 40% of this, namely $1.8 billion, could be reflected as illegal "flows" not captured by the law. This sum could be paid for in rupees domestically but stored in tax havens abroad.

]This implies at least $2 billion is salted away only on the hawala route. One can imagine the total including under-invoicing/ over-invoicing of exports and imports and getting the balance stored abroad and kickbacks from major defence/ civilian contracts. Then there are funds earned by artists/ entertainment/ sports people, which are not brought in but stashed abroad.

It will be of interest to note that OECD estimates the amount in tax havens to be in the range of $1.7 trillion to $11.5 trillion, on a conservative scale. The US suggests it is losing at least $100 billion per year due to tax havens.

Switzerland is specifically mentioned among tax havens as it is the largest and the oldest and also the most uncooperative. For instance, a report dated April 10, 2009 by AFP mentions that "The head of the Organisation for Economic Cooperation and Development, Angel Gurria, referred in a letter to Swiss President Hans-Rudolf Merz to the "inaccuracy" of charges of unfair treatment made by Swiss officials. Switzerland has expressed its disapproval of being targeted as a tax haven by refusing to authorise a budget contribution to the OECD. "There are no 'blacklists' and the OECD did not include or 'threaten to include' Switzerland on any black list," Gurria wrote, according to a statement made available by the OECD. "We only shared the criteria that have been approved by our committees and the jurisdictions that were adopting or not the OECD standard," he said.

"As you know very well, Switzerland does not yet have a single agreement on the exchange of tax information that conforms to the OECD standard." That is the reason all eyes are on Switzerland.

Another interesting thing which is taking place is the result of the crackdown in Germany. An April 8 report by Reuters says, "A crackdown on tax havens that prompted Switzerland to loosen its banking secrecy is encouraging more and more Germans to come clean about foreign accounts they use to evade taxes. Berlin has waged a very public campaign to stamp out tax evasion since Klaus Zumwinkel, then chief executive of Deutsche Post and one of Germany's top businessmen, was arrested in a major tax probe last February.

"Zumwinkel kicked off a bit of an avalanche," said Andreas Boehm, a lawyer based in central Berlin. "Afterwards, the number of people coming clean with us... rose by about 400-500%. And that level has been maintained." This is a positive outcome of the LGT affair where India has been reluctant to grab the names of Indians in the list with the Germans.

A report in a leading Indian magazine in February regarding the foreign travels of the ministers of the Union cabinet states that a large number of them have visited Switzerland including side personal trips, definitely not for skiing in the Alps.


Hence, we can say there are three issues at stake here: The total amount of illegal money stashed abroad; the amount of illegal money kept by Indians in various tax havens; and the amount kept in Switzerland.

 

On the first issue, developed economies are taking appropriate actions.


On the second and third issues, we are debating about the need to provide exact pin code address and permanent account numbers of the culprits before we even debate.


As for the silence of our business media, both print and electronic, we can surmise that hedge funds etc have invested in many of these companies and it could be through or from these tax havens. That might explain the eloquent silence.

 

But as a Tamil proverb outs it, can a pumpkin be completely hidden in a katori of curd rice?

The Swiss vaults will be opened up with or without India's role. If it happens as a "collateral benefit" to India, it will make us a banana republic worse than that of Sani Abacha's Nigeria.

The choice is ours. Either we play our necessary role in the global forums and are a facilitator to get back our money, or become a laughing stock when the who's who of India list is published in some American or European news portal.

The writer is professor of finance and control, Indian Institute of Management - Bangalore, and can be contacted at vaidya@iimb.ernet.in. Views are personal.

 

http://www.dnaindia.com/report.asp?newsid=1249893

Cornered govt to share black money info

23 Apr 2009, 0431 hrs IST, Dhananjay Mahapatra, TNN

 

NEW DELHI: The UPA government seems set to break this news to the Supreme Court by Friday -- it has got hold of the long-awaited secret data about account holders in LGT Bank in Liechtenstein, for long the safe haven for keeping money siphoned out of India and other countries. 

Responding to a PIL by Ram Jethmalani and others, the Centre through additional solicitor general Gopal Subramaniam on Wednesday promised to explain to SC within 48 hours the "more than adequate" measures taken to tackle the menace.
 

A Bench comprising Chief Justice K G Balakrishnan and Justices L S Panta withheld issuing notice to the Centre on the PIL because of the pledge by the ASG.
 

The ASG was responding to the charge by the petitioners who also included KPS Gill, Subhash Kashyap, Jalbala Vaidya, Gopal Sharman and Prof B B Dutta that the government had been lethargic in trying to get information on the deposits in Liechtenstein which was sold by a former employee of the LGT Bank based in Germany.
 

But even as Subramaniam assured the Supreme Court of the bonafides of the government, he took a swipe at the "mystifying" timing of the PIL filed in the midst of the election campaign. "It is not a recent problem. It has definitely not cropped up during the electioneering but had existed for decades. Surely the petitioners did not come to know about it just now," he said. The remark was seen as alluding to the bid of L K Advani, BJP's prime ministerial candidate, to turn the issue of black money stashed by Indians abroad into a campaign theme.
 

The petition said: "A former employee of LGT Bank in Liechtenstein sold data on about 1,400 people to tax authorities across the world. After receiving the data, the German government initiated action against around 600 tax payers for possible tax evasion. It has reportedly offered to provide data to any country that seeks information."
 

"It is reported that the Indian finance ministry wrote letters to the German authorities in February 2008 and again in June 2008 seeking information about the Indian account holders. However, it appears that no information has been received from the Genram authorities. Apparently, the case has not been rigorously followed," the petitioners alleged.
 

Subramaniam rebuted the charge by saying that Prime Minister Manmohan Singh had at the recent G-20 meeting said that the era of secret banking was over and had called for international cooperation to make operations transparent.
 

"We are in complete control of the situation," the ASG assured the court about the prompt steps taken by the Centre and said a day after the news story about Liechtenstein accounts appeared in the media on February 27 last year, the government had written to the German authorities seeking details of possible Indian account holders in the LGT Bank.
 

"The government received in last week of March data on account holders offered by the German authorities in a CD form," sources told TOI after Wednesday's hearing. This is likely to figure prominently in the soon to be filed affidavit in SC.
 

Prior to Subramaniam's presentation of the Centre's stand, senior advocate Anil Devan and T R Andhyarujina, appearing for the petitioners whom they referred to as "super senior citizens", said the US government's tough measures forced the famous Swiss bank UBS to enter into a deferred prosecution agreement with it and reveal the names of Americans who have stashed black money there. UBS has even agreed to pay $780 million as penalty to US, Devan said.
 

Refusing to be identified or branded as towing a particular political party line, Devan said the black money had been continuously stashed abroad because of the inaction of all political parties.
 

"All political parties are responsible. We do not want any individual's name. We want to know why not even a single individual has been caught till date and no action has been taken to counter the problem," he said.
 

The Bench, without issuing notice on the PIL, allowed the Centre to file its response within its self-imposed 48-hour deadline and posted the matter for further hearing on May 4.
 

dhananjay.mahapatra@timesgroup.com 

http://timesofindia.indiatimes.com/articleshow/msid-4436818,prtpage-1.cms

SC to hear plea on money stashed in foreign banks on May 4

 

Press Trust of India / New Delhi April 22, 2009, 15:31 IST

The Supreme Court today decided to hear on May 4 the petition filed by former Law minister and advocate Ram Jethmalani and others seeking a direction to the government for taking action to bring back money stashed in foreign banks

The government said it has already taken action on the matter and will file an affidavit regarding the issue within 48 hours.

The petition, which claimed black money to the tune of Rs 70 lakh crore was stashed in foreign banks, was mentioned by senior advocate Anil Dewan before a bench headed by Chief Justice K G Balakrishnan.

Additional Solicitor General (ASG) Gopal Subramanian said the timing of filing the petition was mystifying when the election was round the corner.

He said government had acted on the issue when it came to its notice in February 2008.

The ASG said the government is in total control of the situation.

He added that the petition has been filed on the basis of newspaper reports, which could not be relied upon.

http://www.business-standard.com/india/news/sc-to-hear-pleamoney-stashed-in-foreign-banksmay-4/59064/on

 

IN THE SUPREME COURT OF INDIA

ORIGINAL WRIT JURISDICTION

WRIT PETITION (C) No. 176 OF 2009

IN THE MATTER OF :

RAM JETHMALANI & ORS.                                              …PETITIONERS

VERSUS

UNION OF INDIA & ORS.                                                           …RESPONDENTS

 

BRIEF WRITTEN SUBMISSIONS ON BEHALF OF THE PETITIONER

BY

ANIL DIVAN

 22 APRIL 2009

 

1.                  An article by R. Vaidyanathan in the magazine ‘Eternal India’ in its issue of April 2009  is annexed to the Writ Petition showing very large amounts siphoned off and illicitly transferred outside India and kept in foreign banks.  Further supporting material in the form of a small compilation is annexed hereto. 

2.                  The US Department of Justice (USDOJ) made a release on February 18, 2009 which is posted on its website (Page 3 of the Compilation).  This shows that UBS AG, the Swiss Bank, entered into a DEFERRED PROSECUTION AGREEMENT under which information about United States citizens and their identities were to be disclosed.  UBS further agreed to pay US $ 780 millions in fines, etc. 

3.                  Another release by the USDOJ dated April 14, 2009 posted on its website (Page 5 of the Compilation) shows how the US Government has actively proceeded against its own citizens in criminal proceedings for filing false tax returns and concealing assets in secret bank accounts.

4.                  An article on www.rediff.com dated 18 August 2008 (Page 12 of the Compilation) states how Germany obtained sensitive data from LTG Bank in Liechtenstein and offered to share the data with other countries.  

5.                  A report in the Times of India dated 31 March 2009 (Page 11 of the Compilation) quotes the Finance Minister in relation to Germany offering to share the aforesaid data pertaining to clients of LTG Bank in Liechtenstein. Germany was able to procure information through an official of the LTG Bank in Liechtenstein regarding secret accounts of German citizens illegally kept there and had publicly agreed to share information with other countries, 

6.                  An article appearing in the Mint (The Hindustan Times-Wall street Journal publication) dated January 12, 2009 gives details in relation to alleged illicit funds of Pune based Real Estate consultant Hassan Ali Khan and Kashinath Tapuria and his wife Chandrika Tapuria, his alleged accomplices.  

7.                  An article by Sitaram Yechury CPI(M) Politburo member and Member of Parliament published in Hindustan Times dated 25th February, 2009 quotes the Global Financial Integrity Report, 2009. The article states that “illegal financial outflows from developing countries have been growing at the rate of 18.2% annually in this decade.  How much of this is from India?  Surely this must be unearthed.” 

8.                  The above material in addition to the Article by Mr. R. Vaidyanathan annexed and marked as Annexure P-1 to the petition, raises far-reaching questions about non-enforcement of laws against powerful and rich individuals who have illegally transferred and hold vast funds abroad. 

9.                  It is respectfully submitted that this Hon’ble Court be pleased to adopt the well settled procedure of a continuous mandamus and issue notice to the Respondents to explain :

 

(a)         In detail what steps and actions have been taken to enforce laws against individuals who have transferred abroad their illicit funds.

(b)         Whether names of any Indian citizen(s) have been received from Germany relating to accounts held at the LTG Bank in Liechtenstein. If not, when is such information expected to be received?

(c)          Whether accounts in foreign banks, particularly those of Hassan Ali Khan and Kashinath and Chandrika Tapuria have been frozen and/or attached and what steps have been taken in regard to the same, including repatriation of the funds from those accounts?

(d)         In view of the material available what is the estimate of the respondents of the extent of the illicit funds parked abroad by Indians.

ANIL DIVAN

RBI to upgrade regulations to deal with tax havens

 

Press Trust Of India / Mumbai April 22, 2009, 0:23 IST

The Reserve Bank of India (RBI) today said it would deal with the problem of black money being hidden in tax havens by continuously updating its regulations in line with the G-20 guidelines on strengthening transparency in cross-border movement of capital

 “The RBI would continue to incorporate in its regulations latest international best practices (to deal with tax havens and non-cooperative jurisdictions),” the central bank said in its response to the recommendations of the G-20 Working Group on Enhancing Sound Regulation and Strengthening Transparency.

The working group of G-20 nations, which include developed and developing countries, underlined the need for increased disclosure requirements on the part of taxpayers and financial institutions to report transactions involving non-cooperative jurisdictions.

The recently concluded G-20 summit in London pledged “to take action against non-cooperative jurisdictions, including tax havens”. The G-20 communique said, “We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over.”

Following the G-20 declaration, the Organisation for Economic Cooperation and Development came out with a list of countries which did not commit to the internationally agreed tax standards.

The RBI said that its guidelines on Anti Money Laundering and Combating of Financing of Terrorism were in consonance with the Financial Action Task Force, an inter-governmental body on Anti-Money Laundering.

Moreover, it added, banks have been advised to be extremely cautions while continuing relationships with banks located in countries with poor know-your-customer (KYC) standards and also nations which have been identified as non-cooperative in the fight against money laundering and terrorist financing.

http://www.business-standard.com/india/news/rbi-to-upgrade-regulations-to-dealtax-havens/355896/

 

So, the UPA has names of account-holders in Liechtenstein. Throw UPA out of power.

The Hindu, April 22, 2009 

Pranab denies UPA going slow on unearthing Swiss Bank accounts

Kolkata (IANS): Minister for External Affairs Pranab Mukherjee Wednesday denied that the United Progressive Alliance (UPA) government was going slow in taking action to unearth illegal money of Indian citizens kept in secret Swiss Bank accounts.

Addressing a press conference here, Mukherjee asked why the Bharatiya Janata Party (BJP)-led National Democratic Aliance (NDA) had not taken steps in this regard when it was in power.

"Reports that the government of India is going slow in taking action against illegal money of Indian citizens stashed away in secret Swiss Bank accounts and other tax havens are completely incorrect and are denied," Mukherjee said.

He added that the UPA government was fully seized of the matter and had taken all necessary steps in this regard.

The minister's statement was in response to BJP prime ministerial candidate L.K. Advani's repeated allegations that the central government has not taken any steps to unearth the illegal money.

Mukherjee said that contrary to some reports, there was no estimate by any authority abroad or even the Swiss Banking Association about the amount of money held by Indians in such accounts.

Regarding Advani's statement that his party would enact a law for unearthing of Indians' Swiss bank accounts if voted to power, Mukherjee asked: "What prevented them from notifying the act when they were in office?"

In the G20 summit in London, Prime Minister Manmohan Singh had specifically raised the issue of sharing information relating to tax compliance and bringing tax havens and non-cooperating undertakings under close scrutiny.

"This initiative has been accepted by G20 leaders. There is an open call to adhere to international standards including exchange of information," Mukherjee said.

India has also fully accepted the Organisation for Economic Cooperation and Development (OECD) standards, which are reflected in several bilateral tax treaties signed by the government, he said.

The minister claimed that the government has consistently put pressure on Switzerland on sharing information on tax related matters despite the initial refusal by Swiss authorities to do so.

"Switzerland has now announced its intention to conform to OECD standards," Mukherjee said, adding that the UPA government has already given the nod for re-negotiating the India-Swiss agreement in this regard.

"We are also seeking inclusion of enabling provision for sharing of such information with other law enforcement agencies," he said.

Mukherjee also termed as incorrect the suggestions that India was unwilling to gather information from Germany, "which has a list of Indian citizens having deposits in LGT Bank".

He explained that the government had officially requested German authorities in February 2008 to provide information related to Indian citizens.

"After pursuing the matter for more than a year, we received information from Germany March 18. Immediate follow up action has been initiated," he said.

However, the minister said the government was not in a position to publicly disclose the information as "Germany reiterated the secrecy obligations under the tax treaty while handing over the information".

He said the Prevention of Money Laundering Act passed in 2002 was notified in 2005 by the UPA regime, which will set up the Financial Intelligence Unit-India (FIU-IND) in November 2004.

He said the intelligence gathered by the FIU-IND is shared with other law enforcement agencies such as the Central Bureau of Investigation (CBI), Central Bureau of Direct Taxes, Reserve Bank of India (RBI) and the state governments.

With regard to getting membership of Financial Action Task Force (FATF), he said India has been mounting pressure on FATF and other such regional bodies under it on the issue.

http://www.hinduonnet.com/thehindu/holnus/000200904221522.htm 

Tax havens with loot from Hindusthan: while Antonia fiddles,Germany acts!

The return of the loot of Rs. 75 lakh crores means the return of Rs. 1 lakh each to 75 crore Hindusthanis. Throw UPA out of power.

German Law : 21.04.2009 

New legislation seeks to close tax haven loopholes

 After weeks of political wrangling, Germany 's ruling coalition has reached agreement on a draft law to combat tax evasion. The revised draft law is to be presented to Chancellor Angela Merkel's cabinet on Wednesday. Finance Minister Peer Steinbrueck (SPD) and Economics Minister Karl-Theodor zu Guttenberg (CSU) have resolved their differences after heated debate over several issues blocked passage of the proposed legislation. The law makes it harder to illegally transfer money abroad. Steinbrueck' s initial law proposal met with stiff opposition from SPD's conservative coalition partners. Chancellor Angela Merkel's Christian Democrats (CDU) had cricitised the proposal, saying that it would place all tax payers under suspicion just because they happened to have business ties with foreign countries that were on a blacklist of tax havens. Lawmakers also expressed concern that the draft law in its current form could violate the country's constitution. Berlin has waged a campaign to stamp out tax evasion since Klaus Zumwinkel, then chief executive of Deutsche Post and one of Germany's top businessmen, was convicted in a major tax evasion trial. 

The German Taxpayers' Association also criticised the fact that individual taxpayers were being scrutinzed by the finance ministry because other countries were not cooperating with Germany 's tax authorities. Around 30 billion euros ($40 billion) are lost to Germany every year due to tax evasion and at least 10 times this amount has so far been illegally transferred abroad from Europe 's largest economy, according to calculations by the DSTG tax union. (Reuters)  

2008 : Germany Punishes First of Liechtenstein Tax Dodgers 

Judges in Bochum on Friday handed a two-year suspended prison sentence to a 66-year-old real estate tycoon in the first case brought to justice in Germany in connection with a major Liechtenstein tax evasion scandal. Judges in the western German city of Bochum told the first multi-millionaire up for trial he would probably receive a suspended term of two years' jail for evading 7.5 million euros ($11.8 million) in tax between 2001 and 2006.

Elmar Schulte, from the western city of Bad Homburg, was found guilty of six counts of tax evasion after depositing several million euros in the Alpine principality of  Liechtenstein and failing to declare the interest made. He had made a full confession and already paid 7.6 million euros in back taxes and fines to German tax authorities. 

Germany 's BND foreign intelligence service described in February how it bought data on trusts managed by the Liechtenstein Bank LTG on behalf of wealthy tax-shy Europeans. The BND reportedly paid about 4 million euros for one DVD with the data. 

Since then, German prosecutors have recovered 110 million euros in arrears from repentant taxpayers hoping to ward off trials, according to a prosecutor, Eduard Gueroff, quoted Friday by the newspaper Westdeutsche Allgemeine Zeitung. Other European nations have mounted similar sweeps using the leaked data. 

Widespread sweep 

Prosecutors in Bochum said they have opened inquiries against about 700 tax dodgers all over Germany . Under German tax law, they were supposed to report all dividends and interest earned abroad by trusts that they fully controlled. Liechtenstein has angrily denied abetting tax evasion, but also refuses to disclose whose money it is keeping, saying it is up to bank clients to honestly report their income in their home nations. The scandal broke in February when police identified Klaus Zumwinkel, chief executive of world parcels and mail carrier Deutsche Post, as a suspect. TV news trucks staked out his home as it was searched and he resigned his post. Many scared taxpayers turned themselves in, even if they were not named on the DVD. The newspaper quoted Gueroff saying that after 200 searches of homes and offices, prosecutors were still not finished. "We're doing a bit more raiding again at the moment," he said. The German raids have highlighted the sensitive issue of tax havens protected by historic and seemingly ironclad policies of bank secrecy.   

Merkel urges transparency  

As widespread searches continued in connection with the biggest tax fraud probe in German history, German Chancellor Angela Merkel said she sought "a comparable level of transparency" with Liechtenstein as with European Union states, given that a full tax harmonization was not possible. The chancellor noted that Liechtenstein , which is not an EU member, "is a country about which we still have questions." Those questions likely include how hundreds of wealthy Germans were allegedly able to hide an estimated several billion euros in lightly-taxed Liechtenstein foundations, depriving government coffers of several hundred million euros in taxes. While it is not illegal to put money into the miniscule principality wedged between Switzerland and Austria, failing to declare the funds is punishable by prison terms of up to 10 years because German law expects taxes to be paid in an individual's country of origin. The union of German tax officials estimates that such tax evasion amounts to around 10 billion euros annually. 

Strict banking laws maintain secrecy 

In Liechtenstein , strict banking secrecy laws provide protection from fiscal services in other countries. Germany ended up paying between four and five million euros for information on the alleged German fraudsters to a mysterious informer who officials in Liechtenstein say stole the data in 2002. "All the same, it is scandalous that in the heart of Europe, countries like Liechtenstein , but also Switzerland , do not consider fiscal fraud a felony but just a simple misdemeanor, like traffic violations," commented Caspar von Hauenschild of the anti-corruption group Transparency International. "The reality is that Liechtenstein actively aids tax evasion, that it has made it an entirely separate economic activity." Liechtenstein is termed an "un-cooperative tax haven" by the Organization for Economic Cooperation and Development (OECD), along with two other principalities, Andorra , between France and Spain , and Monaco on the Mediterranean coast near the French border with Italy . 

OECD slams tax haven's attitude 

"Excessive bank secrecy rules and a failure to exchange information on foreign tax evaders are relics of a different time and have no role to play in the relations between democratic societies," OECD Secretary-General Angel Gurria said Tuesday in a statement. Other fiscal havens often singled out include Guernsey and Jersey in the Channel Islands, or the Bahamas and Cayman Islands . In theory, European havens agreed in 2005 to withhold taxes on accounts held by foreigners and to remit most of the amount to their country of residence, starting at 15 percent and slated to increase to 20 and finally 35 percent. In exchange, Liechtenstein , along with Andorra , Austria , Belgium , Luxembourg , Monaco , San Marino and Switzerland were not obliged to provide details on funds placed in financial institutions on their territory. But policy gaps still allow family foundations in places like Liechtenstein to be used by those who seek to evade taxation. Taxes on earned interest can be as little as 0.05 percent. That compares with German taxes, including capital gains, which will reach as high as 28 percent starting in January 2009. The German tax officials union predicted that Merkel alone would not be able to fight fiscal havens and win. "You would need strong political pressure from the entire European Union," union president Dieter Ondracek told AFP news agency. "And it's not going to happen tomorrow." 

------------------------------------------------------------------------- 

COMMENT: Enclosed below is a 'sample' of the 'Indian Fiddling Show'!!! 

 

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

 

·   The GE-20 meeting was not the proper forum for taking up the issue.

 

·   There is doubt about the figures.

 

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

 

·   Is Mr. 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.

 

Forgotten is the study of Raymond W Baker, a Harvard MBA and a Brookings scholar, whose book, Capitalism’s Achilles Heel: Dirty Money and How to Renew the Freemarket System, published in 2005 sparked off a huge debate in the U.S. on the linkages between terror, national security and black money. 

Mr. Baker estimated that the black money in banks was $11.5 trillion to which, he found, $1 more trillion was being added every year. In the process, the West was getting an annual bounty of $500 billion from developing countries, including India. Even the OECD had accepted the figure of $11.5 trillion. 

 

Mr. Baker heads the Global Financial Integrity (GFI), a watchdog of illicit flow of monies in the world, which has also estimated the illicit wealth from India. 

The GFI study shows that during the period from 2002 to 2006, annually $27.3 billion was stashed away from India, making a total of $137.5 billion for the five-year period. That is in five years the report said Indian wealth, amounting to Rs. 6.88 lakh crore, would have slipped out of India. 

 

The report said there was need for a national strategy to deal with this illegal outflow by collecting information from emigration, monitoring high frequency tax havens, becoming a full fledged member of the financial action task force, using financial intelligence sharing for security purposes, providing legislative support, and constituting a high- level task force for this purpose.

 Rs. 70 lakh crores = Rs. 1 lakh for 70 crore Hindusthanis


SC moved for black money return

 22 Apr 2009, 0353 hrs IST, TNN

 NEW DELHI: The heated political debate over recovery of money siphoned out of India and allegedly stashed in foreign banks reached the Supreme Court on Tuesday with eminent lawyer and former law minister Ram Jethmalani along with prominent personalities filing a PIL seeking urgent remedial measures to bring back the black money estimated at Rs 70 lakh crore. 


Jethmalani, joined by five others including KPS Gill and Subhash Kashyap, through senior advocate Anil Devan told a Bench comprising Chief Justice K G Balakrishnan and Justices P Sathasivam and J M Panchal that both US and Germany have already initiated steps for recovery of the black money in foreign banks and India should follow suit without any loss of time.
 

The PIL, being not part of Tuesday's list of business before the Supreme Court, was mentioned but the Bench said it needed to go through it. It then posted it for preliminary hearing on Wednesday.
 

Referring to a recent article in a magazine, the petitioners said it was estimated that between the years 2002 and 2006, "nearly $1.4 billion, roughly equivalent to Rs 70 lakh crore, have been siphoned off from this country and stashed away in foreign banks".
 

"Finance minister P Chidambaram has publicly acknowledged that he is in the know of all these facts and as far as petitioners know, the only action so far is a communication alleged to have been made by the minister to the Leader of Opposition. The LoP has not confirmed this claim so far. In any event such communication does not excuse total apathy in the matter of seizing these funds and prosecuting and punishing the guilty persons," the PIL stated.
 

Seeking a directive from the SC to the Centre, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), Enforcement Directorate and Central Board of Direct Taxes to get back, what they referred to as, "stolen property", the petitioners said the colossal failure to take action on this issue was due to the fact that "influential politicians in most of the political parties are involved in the offences in question".
 

Alleging that huge funds from India handled by operatives of Swiss Bank -- UBS -- had been detected by ED, the petitioners said, "It is shocking to know that in spite of the nefarious activities in helping Indian citizens to hide their assets and committing tax fraud, the RBI has been liberal in granting the retail licence by giving them (the bank) a clean chit."
 

http://timesofindia.indiatimes.com/articleshow/msid-4431230,prtpage-1.cms

Black money haunts Congress

 S. Gurumurthy (Pioneer, OPED | Tuesday, April 21, 2009 )

 [ The manner in which a bold initiative to unearth Indian black money lying abroad was aborted by the then Congress Government in the 1980s was suggestive. Then, as now, the party leadership acted as if it had skeletons to hide ]

" Switzerland was accused of giving shelter to black money and there has been a lot of inflow of such wealth from India and other countries of the world.”This is not Mr LK Advani speaking in an election rally but the Swiss Ambassador to India briefing the media in New Delhi last year. The occasion was the 60th anniversary of Indo-Swiss Friendship Treaty.Admitting that Indian black money gets hoarded in his country, he added that the new law in Switzerland would not stop it but control it “ up to a certain limit ”.

The Swiss diplomat authentically answered the first of the FAQs, that is, whether lots of Indian monies are really stashed away in Swiss banks. Swiss banks are not the only secret destination. There are 37 such shelters in the world, says US Inland Revenue. The secret owners of the monies operate in secrecy — venal businessmen, corrupt politicians and public servants, drug lords, and criminal gangs like the D-company.These slush monies are the financial RDX for terror, besides weapons of mass destruction of national and global finance. That there is secret money is no more a secret. Only the amounts and the owners of that money are secret. 

But how large could be such stolen Indian wealth hoarded in Switzerland so far? Specific estimates of this later. Before that, here is a side show, but a relevant one.

An apology would be in order. For, I figure in this show. In late 1980s, at the behest of an English national daily, while investigating a corporate scam, I had attempted to trail the Indian currencies stashed abroad. In the course of the probe, I had contacted Fairfax, a US investigative firm. Impressed by its skills, I persuaded the Government of India to engage the firm for the task. Fairfax agreed to work for a slice of the black wealth uncovered by them as fee. According to the Swiss sources then, the Indian money stashed in Swiss banks was estimated around some $300 billion. That was enough to excite the Fairfax to go for the kill. 

But, soon my efforts landed me in jail on March 13, 1987, when the Central Bureau of Investigation arrested me on charges that later turned out to be bogus, but were enough to stop the probe. The whole nation knew then that real reason why rulers struck was their fear that the probe had targeted the Bofors pay-off and secrets monies of the ruling family abroad. Rajiv Gandhi, the then Prime Minister, moved honest and bold civil servants like Vinod Pandey and Bhure Lal out of the probe and eventually sacked the then Finance Minister VP Singh, who had authorised the efforts. 

The chain of events that followed led to corruption emerging as the major issue in the 1989 poll in which Rajiv Gandhi, who had wiped out the Opposition in 1984 election, was defeated, and VP Singh became the Prime Minister. But there is a big lesson in these developments that often goes unnoticed. And that is the way the bold national interest initiative to unearth the Indian black wealth abroad was aborted clearly confirmed that the ruling party was mortally afraid of any probe into secret monies abroad. This fear haunts the Congress even today. That is why the 1987 episode is relevant now. 

Now cut to the main story. 

Illicit monies are the dirty outcome of modern capitalism. But, after the 9/11 terror attack, the United States realised that not just the buccaneers in business but terrorists like Osama bin Laden could hide their funds in secret havens and use them to bomb the world.Campaigns against dirty money as high security risk commenced with the path-breaking research done by Raymond W Baker, a Harvard MBA and a Brooking scholar. His research was published in a book titled Capitalism’s Achilles Heel: Dirty Money and How to Renew the Free-Market System in 2005. 

This set off intense debate in the US as the exposure linked dirty business and black money with terror and national security. Raymond Baker had estimated, using authentic data, tools and reasons, the tainted wealth stashed in banks at $11.5 trillion to which, he found, one more trillion was getting added annually. He added that in the process the West was getting an annual bounty of $500 billion from the developing countries, including India. 

Global Financial Integrity, a global watchdog headed by Baker to curtail illicit money flows, has recently brought out detailed estimates of the black money hoarded in secret havens from different countries. GFI research shows that during the period from 2002 to 2006, annually $27.3 billion was stashed away from India, making a total of $137.5 billion for the five-year period (the Executive Report of GFI in www.gfip.org on ‘Illicit Financial Flows from Developing Countries 2002-2006’ Economists’ version). That is, in just five years, Indian wealth amounting to Rs 6.88 lakh crore was smuggled out of India. This gives clue as to how much Indian money would have slipped out of India in the last 62 years, particularly during the Nehruvian socialist regime when the income tax (97.5 per cent) and wealth tax (almost equal to the income earned on investments) together constituted double the income earned! 

It is undisputed that the Nehruvian socialist model had forced huge sums of Indian money out of India. So the amount of Indian black money stashed away in the last 60 years — estimated at from $500 billion (Rs 25 lakh crore) to $1400 billion (Rs 70 lakh crore) — do not seem to be wide off the mark. Economists call it flight of capital. This is the Indian people’s money stolen away from them. 

See the consequence even if part of it is brought back. A portion of it would make India free from all external debts which is now over $220 billion; India will transform into an economic superpower; some 10 or 15 Indian Rupee could buy a US dollar which today 50 Indian Rupees cannot. A litre of petrol on our roadside would cost some Rs 15 or even less, against today’s 40 plus; the cost of imports in rupee terms would be down to a third or half; India’s entire infrastructure needs can be funded; India will become so energy efficient and cost-competitive that exporters may need no sops at all; India will lend to — presently it borrows from — the world. India’s housing can be funded at affordable cost; rural poverty can be wiped out... The list is endless. 

http://www.dailypioneer.com/170858/Black-money-haunts-Congress.html

Bringing India’s money back to Indian shores

 

Arun Shourie Posted online: Tuesday , Apr 21, 2009 at 0134 hrs

 

Stupefied by the string of endorsements 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 G-20 meeting was not the proper forum for taking up the issue.

• There is doubt about the figures.

• •Why did the BJP government replace FERA with 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 German government had obtained names of persons who had stashed money in the LGT Bank in Lichtenstein. The reply from the then-finance minister P. Chidambram showed that the government intended to do little except go 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 the report filed by Amitabh Ranjan in The Indian Express of March 31, 2009]. Subsequently, we took up the matter in Parliament too. And yet the evasion, “Why now?” 

The G-20 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, the PM had taken up the matter at the G-20 summit. As its spokesmen could not point to any statement he made either at the summit or the subsequent press meet, they drew solace from a passing reference he had made at Gordon Brown’s dinner.

In any case, if the G-20 summit was not the right forum for taking up this matter, how is it that in the communiqué that the G-20 leaders issued on April 2, 2009, in paragraph 15, entitled, “Strengthening the Financial System,” they pledged”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 OECD paper 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 no superpower pretensions, have succeeded in getting their money back. Even as of last October, 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 yesterday, 18 April, 2009, The Times of India, should be quoting the Swiss ambassador to India saying that so far, 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?

Can the government which allowed Ottavio Quattrochi 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? 

n Why did the BJP government replace FERA with 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 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 VP Singh government when FERA came to be used for interrogating captains of industry — like Mr. S.L. Kirloskar — under harsh circumstances. As news reports of that period themselves indicate, 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, if you go to the Rediff website and turn to their dispatch of 25 July, 1998, on “FEMA, Money Bills: Cabinet nods, Parliament’s turn next,” you will read, “The Bills were broadly on the lines of a draft prepared under the leadership of then Finance Minister Palaniappan Chidambram.”

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 trans-border 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 The Indian Express on 25 August 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 G-20 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 with FEMA, the NDA government made sure that it would have an additional two years to file prosecutions under FERA. And it filed as many as 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 did not pursue later.

The fact 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 G-20 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 CPM, 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?!

The writer is a BJP MP in the Rajya Sabha

http://www.indianexpress.com/story-print/449316/

'In 5 years, Indians stashed Rs 688,000 cr illegally'

April 20, 2009 | 13:24 IST

S
 Gurumurthy, the leading chartered accountant who is also the convener of the Swadeshi Jagran Manch, is a member of the taskforce created by the Bharatiya Janata Party's prime ministerial candidate L K Advani to bring back the black money stashed away in various banks outside India if the National Democratic Alliance is voted back to power.

The first report by the taskforce was released a few days ago. Other than Gurumurthy, those involved in the preparation of the report was former Intelligence Bureau director Ajit Kumar Doval, Dr R Vaidyanathan from the Indian Institute of Management-Bangalore, and lawyer Mahesh Jethmalani, the BJP candidate from the Mumbai North-Central constituency.

In this exclusive interview with Shobha Warrier, Gurumurthy discusses tax havens, secret bank accounts and what the taskforce's plans are.

You are part of the taskforce created to bring black money back from secret bank accounts abroad. The BJP has made it an election issue. Were you instrumental in getting Mr Advani to take up the issue?

This is a subject I have been working on since 1986. In fact, I was even arrested because I was trying to dig into the secret accounts of the Gandhi family. I have always been talking to many politicians on this subject; I had also spoken to the BJP.

At that time, it was more ideal to work on it than anything practical. It is not that India on its own can prevent global black money being generated, because there are countries which help the generation of black money by their laws, and Switzerland is the most important of them.

These countries provide secrecy, and anybody can go and deposit money incognito. Their laws prohibit the disclosure of names. Only rarely, where you can link the money to corruption or drugs, is it possible to trace the flight of capital. For that, they have treaties with different countries, including with India. But you need to know the name of the criminal and his account number to ask for the details.

It has always been a question on the minds of the Indian people and also those keen on establishing the amount of money that has gone there, but there was no proper estimate. But this has always been a topic of debate in the minds of those who are interested in the country.

Why did the BJP decide to take it up as an issue now?

It is essentially because of the turn in the Western nations' approach to secret banking due to the economic crisis in the West. The West began feeling the pinch of secret banking. They felt that the financial system is getting destabilised because of the generation of black money.

Black money in the West is not as much flight of capital as it is evasion of taxes. In India, it is both black money and flight of capital.

Were the recent developments in Germany, with its authorities asking for the secret names, the turning point?

The Germans took the step of bribing a bank official of the LGT Bank in Liechtenstein by paying $6 million. They got a secret CD containing 1,500 names of people who have stashed away money, and nearly 500, 600 of these were Germans. They acted against them, which included the head of the German postal system.

Then they told the entire world that anyone could ask for the names and if the names of those countries' nationals were there, they would part with it free of cost. All the countries made a request, but not India. So, Advaniji wrote a letter in April last year, but an evasive reply was given.

Three other things also happened. One, after Germany acted very powerfully, there was a big diplomatic row between Liechtenstein and Germany. Liechtenstein is a place from where secret trusts are created and monies are deposited into Switzerland. It is a principality.

Then, Germany took up the issue in the Organisation for Economic Cooperation and Development's 17-nation platform (Switzerland is one of them) and asked for blacklisting and sanctions against Switzerland. France also joined Germany. This happened some time in October last year.

Switzerland did not know what to do then and they began lobbying. France and Germany then took it to the G-20 preparatory meeting. They said at the G-20 meeting on April 2 that they were asking for blacklisting of and sanctions against Switzerland and all those countries that were not cooperating.

So that was why Mr Advani wanted Prime Minister Manmohan Singh to raise the issue at the G20 meet?

At that time Advaniji felt as the PM was attending the April 2 meeting, he should take up this issue. But our people remained silent at the G-20 preparatory meet.

See what India did. We didn't forcefully ask the Germans to give us the particulars. When Germany and France took up the matter in the OECD, we didn't welcome it. When they took up the matter in G-20 we did not support them or join them. So, from all this arose a big question, whether the government was at all interested in working against illicit Indian monies abroad. That is why Advaniji took up the matter. As the government did not take it up, the BJP had to take it up as an electoral issue.

The Congress said Mr Advani was lying...

It is like this: A theft has taken place, and you are arguing about how much has been stolen. Nobody denies the theft! Nobody denies the loot!

How much black money from India must be there in the secret Swiss accounts?

A global study was conducted by an expert, Raymond W Baker, which we have quoted in the report. He published a book in 2005, Capitalism's Achilles Heel: Dirty Money And How To Renew The Free Market System.

After 2001, secret money became an issue of security. So America became worried about terror funding which takes place only through secret banking channels.

His book estimated the black money to be $11.5 trillion which is increasing at the rate of $1 trillion every year, out of which $500 billion is stolen from developing countries.

Is the report one of the reasons why the BJP decided to raise the issue?

That alone would not have helped. The change in the economic situation made the Western countries try to break banking secrecy. That was the most important point. US President Obama has proposed a law to break the secrecy. Like I said earlier, you have to join forces at the global level as the battle needs to be fought at the global level. That is the reason why the BJP decided to take it up.

The GFI study only indicated the magnitude of the problem. It says between 2002 and 2006, the amount of money stashed away from India would be on an average $27 billion a year and totally about $137.5 billion which is equal to Rs 688,000 crores in just five years. So, the fact of the loot can never be disputed.

What the Congress is trying to do is to dispute the maths of the issue. The fact is, whatever be the amount, it is very big.

Why do you think the Congress is not taking up the issue?

Obviously, a large part of it must be Congressmen's money, they have ruled the country for 50 years. Why did Sonia Gandhi not speak on this subject? She is said to be a close friend of Ottavio Quattrocchi and it has been established that he had received bribe money from Bofors through secret banking systems and tax havens. The Central Bureau of Investigation successfully traced the money and kept it frozen. He was allowed to leave India first and then take the money back.

I believe the lead family of the Congress party is a suspect in the matter of foreign money and that is why the family doesn't want the banks' secrecy to be unveiled.

Their friends are the only people who have been caught so far. No other Indian has been caught except the people associated with the Gandhi family in the Bofors scandal.

What are the taskforce's plans?

First, he (Advani) wanted us to find out what the global position was. That is the first report we gave. We have said it is doable if we work on an appropriate strategy. We have to also generate a national consensus and arouse a high level of consciousness among the people about the issue.

Note: See the full text of the report at

http://www.scribd.com/doc/14356543/TASK-Force-Report170409-Mumbai

Is that the reason why a survey was conducted in Gujarat on black money in secret bank accounts?

Yes, the BJP wants to make people to proactively think and participate in the campaign.

You are talking about huge sums of money. If at all we manage to bring it back to India, what do you say India should do with it?

Even if 25 per cent of what they are talking about comes back, India's rating will go up because it's our own money and not borrowed money. It can transform the economic personality of the nation.

The BJP manifesto says if the money comes back, it will be used for fundamental purposes like rural roads, schools, poverty alleviation and things like that. It will be used for social causes and not building airports.

Will the current global recession make people look at globalisation from a different perspective?

Capitalism will undergo a lot of changes because today's capitalism is not what Adam Smith conceived or Karl Marx opposed. Today, capitalists are not the people who handle capital; it's the professionals. It's somebody else's money that the professionals are handling. So, it is not capitalist's capitalism; it's professionals' capitalism.

Now, a further change that has taken place is, it is not actual money, but virtual money that is being used. Imaginary money has been created by brain power and that is put to use as real power. That is the crisis today.

This kind of capitalism will be gone and the original capitalism where 'I look after my wealth' will come back again. That is good for the world. This other man's money I handle which has promoted the expenditure-driven market mechanism is a product of neo-capitalism.

Banking secrecy was considered one of the virtues of capitalism. Now, they call it an evil! This is the U-turn in one year!

In one of your earlier interviews, you told rediff.com that globalisation was not sustainable.

Who is talking about globalisation today? Today, it's just not environmentally, ecologically and culturally sustainable. I have always maintained that it was not economically sustainable, because it is contrary to the very meaning and definition of economics which is associated with frugality.

It is an executive class economics different from the economy class which brings out the difference between economics and excessiveness.

Moreover, globalisation disregards the existence of countries; they talk about a global society, global rule, global citizens, global villages, etc. It was an absolutely idealistic idiosyncrasy. That is gone.

Who is talking about the WTO? I told you long ago that the WTO will not last. If you create an artificial structure, it will not stand. People in different parts of the world have their own models of living; you cannot homogenise them, make them wear the same dress, eat the same food, or see the same cinema or have the same goals. This is what West-centric globalisation attempted, and got the first taste of it in the last four, five years.

Will people start thinking in terms of swadeshi?

People will be more conscious of their surroundings, their people, their family and their society first, and not the distant world.

The distant world is good for a visit, but not for domicile.

http://www.rediff.com///election/2009/apr/20loksabhapolls-in-five-years-indians-stashed-rs-688000-cr-illegally.htm

 Getting India’s money back from Tax Havens

Congress caught in its own web

Arun Shourie (Press Conferdence on 19 April 2009)

Stupefied by the strong 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 Mr. Advani taking up this matter now, on the eve of elections?

·          The GE-20 meeting was not the proper forum for taking up the issue.

·          There is doubt about the figures.

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

·          Is Mr. 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 Mr. Advani taking up this matter now, on the eve of elections?

The fact, of course, is that Mr. Advani took up the matter with the Prime Minister in April last year. He wrote to Dr. 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. Chidambram, 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 pressurized and their bona fides were being questioned! [This information was later confirmed by report filed by Amitabh Ranjan in The Indian Express of 31 March 2009.] Subsequently, we took up the matter in Parliament also. And yet the evasion, “Why now?”

 

The GE-20 meeting was not the proper forum for taking up the issue.

This customarily self-serving rationalization 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 G-20 Summit. As its spokesmen could not point to any statement he made either at the Summit itself or even at the press meet the PM had held after the Summit, 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 G-20 Summit was not the right forum for taking up this matter, how is it that in the communiqué that the G-20 leaders issued on 2 April 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 black-listed 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 Mr P. Chidambaram and other legitimizers 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 “super power, 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 yesterday, 18 April, 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 Quattrochi 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 to 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 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 Mr. VP Singh when FERA came to be used for interrogating captains of industry – like Mr. S.L. Kirloskar – under harsh circumstances. As news reports of that period themselves indicate, 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, Mr P. Chidambaram. Even today, you can go to the website of Rediff-on-the-net, go to their dispatch of 25 July, 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 Chidambram.”

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 trans-border 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 The Indian Express on 25 August 2002. Who wrote the article? None other than P. Chidambaram!

Is Mr 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 G-20 leaders, including Dr. Man Mohan 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 as many as 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 G-20 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 emphasized, 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?!

 Even now, Mr. Advani has urged, all parties, including the Congress, to get together and strive towards this objective.

 

That is an objective that the NDA will most determinedly pursue once it is voted to office.

 

http://www.bjp.org/content/view/2870/394/

What is in bad taste, EC? A foreigner receiving loot from Hindusthan? Almost all tax havens happen to be foreign and operaties of foreign banks happen to be foreigners. So, does the EC want the BJP to make an unrealistic film?

 

What is EC trying to do? Cuddle foreign-passport holders holding high offices of profit in Hindusthan?

 

I suggest that BJP should contest this in Court. Meanwhile, release the film showing an Indian looter flying into Switzerland with a briefcase.

 

Kalyanaraman

 

EC blocks BJP ad on dirty money

19 Apr 2009, 0427 hrs IST, Mohua Chatterjee, TNN

 

NEW DELHI: BJP on Saturday looked all set to raise its ante higher on its theme for bringing back the black money stashed by Indians abroad after 

 

the Election Commission restrained it from showing a 15-second audio visual spot that was produced to be part of the party's campaign. 

Party sources said that the EC declined the party the permission to run the clip on television and on other visual media, on the ground that the shot of a "foreigner" receiving a briefcase from supposedly a corrupt Indian was not in good taste.
 

Those involved in making the film, however, alleged a hidden agenda, saying that the `foreigner' was integral to the theme of money being spirited away by the corrupt in the country. Source said that the party was completely baffled by the decision and was planning to take up the issue.
 

The film on black money was one of the five 15-second spots that had been submitted to the EC for approval as campaign material to be launched by the party in the second phase of elections.
 

BJP has been raising the issue of repatriation of black money stacked away abroad in Swiss banks and other tax havens, at a time when an international consensus has emerged favouring disclosure of identity of those having secret accounts with Swiss banks and in tax havens, and for repatriating the money back to the countries hard hit by the economic slump.
 

BJP's campaign plank has attracted an angry response from Congress which has tried to mock the party by referring to the allegations of corruption against party leaders. Congress has accused the party of indulging in gimmickry, and said that bringing money back would not be possible except in specific cases where the request was backed by specific evidence.
 

That has, however, not deterred the BJP, particularly L K Advani who on Friday substantiated his case by releasing documents.
 

While BJP's prime ministerial candidate led the campaign on black money repatriation, Gujarat chief minister Narendra Modi kept up the momentum by holding a opinion poll on the issue in every Lok Sabha constituency in the state last week.
 

Advani has been speaking about the issue at each one of about 70 campaign rallies he has addressed so far, to ensure the issue does not die out.
 

Meanwhile, the CPM on Saturday questioned Advani's promise to bring back black money from foreign banks, charging the erstwhile NDA government with diluting relevant laws and making way for money being illegally transferred out of India to tax havens.
 

 http://timesofindia.indiatimes.com/India/EC-blocks-BJP-ad-on-dirty-money/articleshow/4418773.cms

Congress gets muddled in lies about public loot stashed away in tax havens

Chidambaram lies about participatory notes. IT was during UPA government regime that SEBI tribunal permitted participatory notes to be used by resident Indians. This route is used in hawala transactions through Mauritius.

Why is he warning the looters to switch monies in tax havens?

Throw the UPA government out of power.  Let the next government be one which promises to bring back the looted monies stashed away in tax havens.

kalyanaraman

Chidambaram hits back at Advani

“Information being obtained from German Tax Office”

Sivaganga (T.N, April 19, 2009): Union Home Minister P. Chidambaram on Saturday described BJP leader L.K. Advani’s 100-day plan to bring back illegal money stashed away in foreign tax havens as a “smokescreen.”

In a hard-hitting reaction to the BJP prime ministerial candidate’s statement issued in Mumbai on Friday, he told PTI: “I am afraid Mr. Advani is doing more harm than good by repeatedly raising this issue, especially when he has been informed of the efforts being made by the government.”

As explained in his letter to Mr. Advani on May 16 last year, the government was already working with the German Central Tax Office to procure the information relating to deposits in LGT Bank in Liechtenstein.

Mr. Chidambaram said the government had made “significant” progress in acquiring information.

“I am not at liberty to disclose the progress made because there are still some procedural formalities required by the German Tax Office,” he said. At the appropriate time, he was sure, the Indian government would be able to release the information obtained.

“I wonder whether he [Advani] is unwittingly alerting those who have deposits abroad to re-arrange their affairs in the next four weeks before a new government is sworn in.”

Mr. Chidambaram said Mr. Advani continued to “mystify” the issues of capital flying out of the country.

He said no one denied that some people had illegally taken money out of the country and kept it in banks and other places protected by strong secrecy laws. — PTI

http://www.hinduonnet.com/thehindu/thscrip/print.pl?file=2009041958050100.htm&date=2009/04/19/&prd=th&

 

BJP report on illegal money electoral gimmick: CPI(M)

Sandeep Joshi (The Hindu, April 19, 2009)

“Advani has failed to assure people that steps would be taken to stop outflow”

NEW DELHI: The Communist Party of India (Marxist) on Saturday termed the Bharatiya Janata Party’s report on illegal Indian money stashed away in Swiss banks an “electoral gimmick.”

“The BJP-led National Democratic Alliance government is equally responsible for this as it took various steps that led to an outflow of Indian money to foreign destinations,” senior CPI(M) leader Sitaram Yechury said at a press conference here.

“[BJP’s prime ministerial candidate] L.K. Advani, who has been talking about Indian money stashed away in Swiss banks, has failed to assure people that effective steps would be taken to stop this illegal outflow of money. Ironically, even his party’s election manifesto talks about it,” Mr. Yechury said. He pointed out that if one went by the BJP’s own report on the issue, nearly $55 billion worth of illicit transfers took place between 2002 and 2004 when the NDA was in power.

Accusing the BJP of “plagiarism” as the Left parties were first to raise this issue and had asked the Congress-led United Progressive Alliance government to act on it, Mr. Yechury said that during its rule, the BJP not only opened the “Mauritius route” for foreign investors but also allowed ‘benami’ transactions via Participatory Notes, abolished long-term capital gains tax and allowed partial capital account convertibility. “All these facilitated illegal outflow of money. Mere expression of concern is not enough; BJP should promise the people that it would ban all such illegal transactions.”

Claiming that around Rs.70-lakh crore in Indian money was stashed away in Swiss banks, Mr. Yechury said India should also ask the Swiss government to give details of accounts held by Indians in its banks to fight the economic slowdown, as was done by the U.S.

“The global financial meltdown and economic crisis have brought the issue of tax evasion by corporates, financial entities and the super-rich into sharp focus. Governments across the world are taking steps to crack down on tax havens like British Virgin Islands and Cayman Islands. The Swiss banks are being asked to disclose information on their account holders in order to track down assets built through tax evasion. The Indian government, however, has so far remained impervious to this growing global concern,” the CPI(M) MP pointed out.

“In February this year, we asked the UPA government to take up the issue with Swiss authorities, but it failed to respond. If the government is serious about stopping black money and raising resources to meet the growing economic crisis, it must take steps to bring back the unaccounted wealth of Indians abroad. The money should be brought back to India and used to fund stimulus packages for industry and carry out development works,” Mr. Yechury demanded.

http://www.hinduonnet.com/thehindu/thscrip/print.pl?file=2009041960690800.htm&date=2009/04/19/&prd=th&

 

 

Will you bring back FERA, Congress asks Advani 

 

By U Anand Kumar 
19 Apr 2009 01:44:00 AM IST (New Indian Express)

NEW DELHI: Continuing the attack on BJP’s Prime Ministerial candidate L K Advani, the Congress on Saturday alleged that the issue of black money was being politicised to get middle class support.

The Congress wanted to know whether Advani would bring back the Foreign Exchange Regulation Act (FERA) to punish the offenders.

The Congress accused the NDA government of indirectly helping those who stashed away illegal money in foreign banks by bringing in the Foreign Exchange Management Act (FEMA) in place of the FERA.

Congress leader and Union Minister Kapil Sibal said: ‘‘We want to ask him (Advani) why did his government do away with the FERA and bring in the FEMA. Have you mentioned in your manifesto that you would bring back FERA. What will be the punishment for those who stash money in foreign banks’’.

Maintaining that the idea to bring back black money was commendable, Sibal said Advani was politicising the issue to get middle class support as the party had lost the support of many sections. ‘‘Let him reply in two days.
I know the answer. This is electoral politics”, he added.

Taking a dig, Sibal said Advani gave wrong version of history and distorted facts in his autobiography ‘‘My Country and My Life’’.

Pointing to the lapses, Sibal said Advani referred Satyapal Dang as the late CPI leader in his book while the veteran communist was alive. “Advani’s duplicity stands exposed when he writes that BJP ‘forced’ Indira Gandhi to order ‘Operation Blue Star’ to liberate Golden Temple from anti-national occupants”, he observed.

Asked about Lalu Prasad’s remark that the Congress was also responsible for the demolition of Babri masjid, Sibal downplayed it by saying that people can say such things some times when they face difficulty in poll time.

http://www.expressbuzz.com/edition/story.aspx?Title=Will+you+bring+back+FERA,+Congress+asks+Advani&artid=hjL5Yb6826w=&SectionID=b7ziAYMenjw=&MainSectionID=b7ziAYMenjw=&SEO=L+K+Advani,+FERA,+Sibal&SectionName=pWehHe7IsSU=

Getting ill-gotten wealth back from tax havens

BJP report: ideal time to join in crusade against tax havens

Special Correspondent

MUMBAI: The interim report of the task force set up by Bharatiya Janata Party’s senior leader L.K. Advani on black money in tax havens abroad, says that India must first realise that this was the ideal time to act and join in the global crusade against secret banks and tax havens.

The report said:

“We recommend that the BJP create a powerful public opinion, which would force those who do not support this measure to come around to support like British Prime Minister Gordon Brown was forced to do after the February G20 preparatory meeting in which he did not extend support for Germany and France.

“India should stop being a silent spectator to the G20 efforts against secret banking and must become an actor, an active player and forthwith change the perception that it is not against secret banking and tax havens.

“India must also urge the German government to provide details of the Indian names from the LGT bank secret records it has accessed from Liechtenstein. It must appoint a special ambassador to work with the G20 specifically to frame India friendly rules to expose secret banking.”

The 16-page report said there was a dramatic change in the global atmosphere on tax havens since a year. Germany, in February 2008, got a secret CD of the LGT bank in Liechtenstein, which contained a long list of tax evaders, including the head of the German Post.

The Organisation for Economic Co-operation and Development (OECD) published a list of tax havens and categorised them according to the level of non-cooperation. In February this year, the U.S. Inland Revenue Service forced the largest Swiss bank, UBS, to part with details of nearly 300 tax evaders and also pay a huge fine of $800 million.

The report referred to several estimates of Indian wealth in these tax havens. The media had reported that the amount could be as high as Rs. 70 lakh crore, while some other estimates pegged it at Rs. 25 lakh crore. Illicit monies were the dirty outcome of modern capitalism. But after the 9/11 attack, the U.S. realised that not just the buccaneers in business but even Osama Bin Laden could also hide his funds in secret havens and use them to bomb the world

Baker’s study

The report quoted the research work of Raymond W Baker, a Harvard MBA and a Brookings scholar, whose book, Capitalism’s Achilles Heel: Dirty Money and How to Renew the Freemarket System, published in 2005 sparked off a huge debate in the U.S. on the linkages between terror, national security and black money.

Mr. Baker estimated that the black money in banks was $11.5 trillion to which, he found, $1 more trillion was being added every year. In the process, the West was getting an annual bounty of $500 billion from developing countries, including India. Even the OECD had accepted the figure of $11.5 trillion.

Mr. Baker heads the Global Financial Integrity (GFI), a watchdog of illicit flow of monies in the world, which has also estimated the illicit wealth from India.

The GFI study shows that during the period from 2002 to 2006, annually $27.3 billion was stashed away from India, making a total of $137.5 billion for the five-year period. That is in five years the report said Indian wealth, amounting to Rs. 6.88 lakh crore, would have slipped out of India.

The report said there was need for a national strategy to deal with this illegal outflow by collecting information from emigration, monitoring high frequency tax havens, becoming a full fledged member of the financial action task force, using financial intelligence sharing for security purposes, providing legislative support, and constituting a high- level task force for this purpose.

http://www.hindu.com/2009/04/18/stories/2009041855861000.htm

 

Black money row: Swiss envoy offers help

18 Apr 2009, 0438 hrs IST, TNN

 

NEW DELHI: On a day BJP's prime ministerial candidate L K Advani again raked up the issue of black money stashed away in Swiss banks, the Switzerland ambassador to India said that his country would act strictly in keeping with "the principle of law'' while dealing with any request from India to unearth the names of account holders. 

Talking to reporters, Switzerland's ambassador, Philippe Welti, said as of now there was no such request with his government. Advani again said on Friday that, if voted to power, his government would ensure that the black money parked in secret accounts abroad is brought back.
 

"One has to first see the request. We would always play according to the principle of law, in case any such request was made,'' stated Welti, adding that he did not want to react to any remark made by India's leaders during the election campaign.
 

Welti said Switerland was going to revise bilateral laws pertaining to tax fraud and evasion, including new taxation policies. Provisions would be made in the mutual agreements with governments for tax evasion and tax fraud, he added.
 

"The banks are supposed to know the customers and ask the origin of the funds. These are guarantees of honest banking. It is not to protect criminals, but to protect honest people who have legitimate rights. If there is any demand, then the particular government can ask for the data,'' he said as he defended banking laws in his country. He added though that the principle of right to protection of privacy would be safeguarded.
 

http://timesofindia.indiatimes.com/India/Black-money-Swiss-envoy-offers-help/articleshow/4415667.cms

 

BJP means business on black money

PNS | Mumbai/ New Delhi

Party panel unveils slew of suggestions to get ill-gotten wealth back

Tough anti-tax haven legislation, changes in banking laws and individuals who frequent tax havens abroad are some of the measures suggested by a BJP-appointed panel to get hold of black money stashed away by Indians in banks abroad. 

Senior BJP leader and prime ministerial candidate LK Advani on Friday released an interim report of his party’s task force that suggested ways to tackle the issue. 

The BJP demanded specific anti-tax haven laws to bring back black money worth thousands of crores of rupees, parked by Indians abroad and asked the Government not to remain a mute spectator to the efforts of G-20 to deal with the corrupt practice.

“Like the Obama administration is planning specific anti-tax haven laws, India must also target tax havens and secret destinations like Switzerland,” Advani said.
Advani had, earlier, in Delhi expressed his party’s resolve to bring the black money back into Indian economy so that it could be utilised to fund developmental projects in the areas of infrastructure, education, health, etc. Although the figures that he had quoted were questioned by several independent observers, none disputed the enormity of the crisis and the need to tackle it.

The veteran BJP leader’s charge that the Centre had brushed aside the demand when he had raised it with the Government angered the Congress which claimed it had given a suitable response to Advani’s letter on the issue. The Congress also claimed it was working to resolve the matter.

“Legislations to enable the Government to initiate legal action and simplify procedures to take action against people who have stashed their money in tax havens should be enacted,” the task force said in one of its recommendations.

“Most of this money has emanated from kickbacks in major deals entered by the Government, under and over invoicing, laundering of drug money and money generated through corruption,” it alleged.

The interim report has been prepared by a four-member committee, comprising S Gurumurthy, Ajit Doval, R Vaidyanathan and Mahesh Jethamalani.

The task force was set up by Advani to recommend steps that a future Government may take to translate the promise of bringing Indian money back from foreign accounts into a reality. 

The task force said, “Creating a powerful public opinion in India is a prerequisite for global response to India’s requirements in regard to unveiling banking secrecy. The world respects powerful domestic opinion on global issues.”

In the absence of a broad national consensus on the issue only a determined leader with a committed team can create a strong national will needed for undertaking this serious agenda, it said.

The BJP, if elected to head the new Government, must appoint a special ambassador to G-20 to deal with only tax haven and secret bank issues, it said, adding that the new regime after the election, must immediately take over the vacant position of leadership of the developing countries.

“For this purpose, it has to change the rules like allowing investments in Indian stocks through participatory notes method which is secretive and allows secret funds into India like the Swiss banks do. Such funds are prejudicial to the national economy as they are prejudicial to the national security. The National Security Advisor has held them as a vehicle for bringing terror funds in India,” it said.

“Maths of the loot may be disputed but the fact of the loot cannot be,” the report said, reacting to the present Government’s response to the BJP’s demand to take a firm position at the recent G-20. 

Indian wealth was estimated to the tune of Rs 6.88 lakh crore in the last five years, the task force said, quoting “Global Financial Integrity” report.

As part of the national strategy, the task force has recommended immediate action to be taken to collect, collate and analyse the immigration records to shortlist persons who have been frequently visiting tax havens.

Inquiries should be initiated in cases where there is prima facie suspicion of visits not being bonafide. This should start with Cabinet Ministers and other high profile political personalities.

Immigration data of Indian nationals should be collected from tax havens as most do not go directly from India to places like Switzerland and Luxembourg, it said.

The other recommendations include proper identification through RBI of banking/financial institutions in tax havens that have high transaction frequency with India, becoming a full-fledged member of the Financial Action Task Force (FATF) to receive and exchange information regarding illegal money in tax havens through their counterparts abroad.

Indian intelligence agencies should be tasked to collect intelligence inputs about illegal financial channels being used for terrorist financing. Similarly, a high level task force of different agencies of the Central Government should be set up to collect and process information and start legal action wherever feasible, it said. 

The panel also suggested that history of illicit wealth holders should be brought out. “If the new Indian Government effectively participates in the global effort today, led by Germany and France, the Indian mission of recovering funds stashed away by Indians will succeed.

Advani said the global financial crisis had compelled the West to take a stand on the illegal money issue. “Developing countries have a disadvantage and could not have got the money back without the western world’s support. But, India has the stature and the world cannot disregard it,” he said. 

But the Congress mocked at the saffron party saying no NDA Government would be formed at the Centre for it to bring back the money.

“Let him (Advani) promise anything. His (NDA) Government will not be formed after the election,” party spokesman Ashwini Kumar told reporters here.

Posing a question to Advani, Kumar retorted, “How much black money did he bring in six years of the NDA rule?”

The spokesman, however, said the party was not rubbishing the issue and was taking all steps in the direction of bringing the ill-gotten money back from foreign banks.
http://dailypioneer.com/170410/BJP-means-business-on-black-money.html

http://sites.google.com/site/hindunew/recovering-looted-wealth

 

Global and national strategies to recover the loot in tax havens – Task Force report

 

Statement by Shri LK Advani at press meet in Mumbai on Swiss accounts Task Force report

 

Friday, 17 April 2009

 

Initiation of vigorous action to bring back Indian wealth hoarded in secret Swiss bank accounts and other tax havens will top the 100-day programme of a future NDA government 

Punish the Congress that has no political will to fight Corruption and crime money

 

On 29 March 2009, I had addressed a press conference in New Delhi and raised the important issue of vast amounts of Indian wealth stashed away in secret Swiss bank accounts and other tax havens around the world. The press conference was held against the backdrop of the G-20 Summit in London on 2 April, where the issue of illicit funds parked in tax havens was scheduled to be discussed. The country expected Prime Minister Dr. Manmohan Singh, who represented India at the G-20 Summit, to put across India’s concerns and expectation forcefully at this global forum. Disappointingly, he only paid lip service to the issue. In contrast, it was the OECD (Organisation of Economic Cooperation and Development) group of rich nations that were most vociferous in demanding an end to banking secrecy in countries like Switzerland.


At my New Delhi press conference, I had stated that a future BJP-led government at the Centre, if elected, would bring India’s sovereign wealth back from foreign shores and use it for various ambitious developmental projects. I had also announced the formation of a Task Force to recommend specific steps that a future government may take to translate our promise into reality.


I am pleased to announce that the Task Force has submitted its recommendations in the enclosed interim report. I sincerely thank members of the Task Force —
 Shri S. Gurumurthy (Chartered Accountant and investigative writer, Chennai); Shri Ajit Doval (Security expert, New Delhi); Dr. R. Vaidyanathan (Professor of Finance, Indian Institute of Management, Bangalore); and Shri Mahesh Jethmalani (Senior lawyer, Mumbai) — for the outstanding work they have done.


The interim report of the Task Force is useful for four important reasons. Firstly, it has placed the problem of India’s wealth hoarded in secret bank accounts abroad in the context of a larger global menace, which western nations have now resolved to fight due to their own internal compulsions. Hence, it has rightly pointed out that India should become an active player in the global crusade against banking secrecy and tax havens.


Secondly, the Task Force has correctly asserted that the “fact of the loot” cannot be questioned although there may be debate on the “maths of the loot”. Based on studies conducted abroad, the Task Force has mentioned that the Indian wealth in Swiss bank accounts and other tax haven may be in the range of $500 billions [Rs 25 lakh crores] and $1.4 trillions [Rs 70 lakh crores]. The credibility of these estimates is reinforced by the figure of $11.5 trillions (Rs. 575 lakh crore) officially given by the OECD (Organisation for Economic Cooperation and Development), a group of rich countries, at the G-20 Summit in London early this month as the amount of global wealth parked in various tax havens.


Thirdly, the Task Force has highlighted the casual approach of the Congress-led UPA government in taking up this important issue at appropriate international fora. Spokesmen of the Congress party have even mocked at the BJP’s effort in this regard. My appeal to voters is simple: Punish the Congress that has no political will to fight corruption and crime money. The word “corruption” does not even figure in the Congress party’s manifesto!


Fourthly, the Task Force has recommended specific measures as part of the Global and National Strategies to bring back Indian money from tax havens abroad.


The important recommendations made by the Task Force are:


Global Strategy

Step I: Creating a powerful public opinion in India is a pre-requisite for global response to India's requirements in regard to unveiling banking secrecy. The world respects powerful domestic opinion on global issues. India must first realize that this is the ideal time to act and join the global crusade against secret banks and tax havens. In the absence of a broad national consensus on the issue, only a determined leader with a committed team can create the strong national will needed for undertaking this serious agenda overcoming all attempts to impede the effort. Those who do not support the move should be seen as supporters of black economy.   


Step II: India should stop being a silent spectator to the G-20 efforts against secret banking and tax havens. It must become an active player and forthwith change the perception that it is not against secret banking and tax havens.


Step III: India must immediately and effectively urge the German government to provide the details of the Indian names from the LGT bank’s secret records. The BJP, if voted to power, must send a special emissary to Germany, which is willing to give the details of Indian names in the LGT bank’s secret records. 


Step IV: India must strive for a coordinated global and multilateral effort, which is the only solution to undo the regime of banking secrecy.


Step V: India has special needs beyond what the West is seeking to break banking secrecy. India should work with the West to get the OECD rules on internationally agreed tax standards. That global coercive action is working is seen from that fact that the G-20 threat to blacklist Switzerland and other tax havens is already beginning to yield results.


Step VI: We recommend that India appoint a special ambassador with adequate knowledge of tax havens and secret banking issues to work with the G-20 specifically for framing India-friendly rules.


National Strategy

  1. Collection of travel information about persons visiting Switzerland and other tax havens. This should start with cabinet ministers and other high-profile political personalities.  
  2. Monitoring tax havens that have high transaction frequency with India. 
  3. India to become a full-fledged member of the Financial Action Task Force. 
  4. Use of financial intelligence sharing for security purposes. Illegal money is a potential source of undermining national security. Therefore, we recommend that Indian intelligence agencies should be specifically tasked to collect intelligence on this count. 
  5. Legislative support: Just as the Obama Administration is planning specific anti-tax haven laws, India should also target tax havens and secret destinations like Switzerland operating in India.  We recommend that stricter laws should place the onus of proving their innocence on the accused if a prima facie case is made out. 
  6. High Level Task Force: We recommend that the Government of India should constitute a high level Task Force with representatives from Finance Ministry, National Intelligence Agencies, Ministry of Law, RBI, SEBI, Economic Intelligence Units, Central Vigilance Commission, CBI and other experts to collect and process the information and start legal action wherever feasible. As large-scale kickbacks are reported from purchases made by some of the Ministries like Ministry of Defence, Ministry of Civil Aviation etc., their representatives could also be co-opted wherever necessary. 
  7. The history of the illicit wealth holders should be brought out: We recommend that when India is able to unveil the banking secrecy through information sharing arrangement, it should get the names and amounts not just as of today but for the entire economic history of the account-holders.

http://www.bjp.org/index2.php?option=com_content&task=view&id=2868&pop=1&page=0&Itemid=394

Unquestioned loot

S Gurumurthy

 

First Published : 13 Apr 2009 03:04:00 AM IST

Last Updated :

All that the BJP leader L K Advani had perhaps intended to do — when he took up the issue of Indian black wealth stashed away in Swiss and other secret shelters — was to put the Congress party on the back foot at the time of the elections. But he would never have imagined that the Congress would go so far back as to hit its own wicket.

This is how the play opened. L K Advani told the media: the Swiss ambassador to India has himself admitted that lots of Indian black money gets secretly lodged in Swiss banks; estimates of Indian black money abroad vary from $500 billion to $1400 billion; forced by the economic crisis, the West, that is Germany, France, US and UK, which had winked at the illicit monies in the past, have begun a crusade against Swiss banks and other secret tax shelters to flush out the money; India must join the Western effort to bring back the Indian black wealth from abroad. With elections round the corner, Advani did turn the issue into a political one. He charged that the Congress was not keen to get back the Indian monies lodged abroad. He cited two instances to support the charge. First, despite his writing to the Dr Manmohan Singh in April last year to ask for the names of Indians reportedly mentioned in the secret record of LGT bank — which the German authorities had offered to open free of cost to give to all who asked for it — the government would not press for the Indian names from Germany. Second, he said that in the G20 preparatory meet in Berlin where Germany and France had called for blacklisting of Swiss and other tax havens, the Indian representatives at that meeting never opened their mouth on the issue.

 

Advani rounded off asking the prime minister to take up the issue of Indian monies stashed away in secret Swiss banks and in other tax havens at the G20 meet at London slated for April 2, 2009. Yet, at the London meet, Dr Manmohan Singh would not utter a word. Had he just said that India would join the G20 efforts, the Advani googly would have gone for a six. But, the Congress party went on the back-foot and hit its own wicket instead. But, why did the Congress hit its own wicket instead of a six? Read on.

 

“Why this now, at the time of the elections?” asked the Congress spokesman Manish Tiwari, not knowing that Advani had written to the prime minister long before, in April 2008 itself, on the LGT bank issue. Then entered Abhishek Singhvi, the more articulate spokesman of the party. He asked what did Advani do when NDA was in power. Obviously he has not even read Advani’s statement. Advani has only questioned why the Manmohan government is not acting now [in March 2008] in tandem with the West which has begun crusading against secret banking. Only now the West has turned against secret bank funds. So the question why did the BJP, or even the Congress, not act in the past does not arise. More. Singhvi said that “G20 is not the forum for the issue” of Indian black wealth in Swiss banks. Obviously, running between courtrooms and newsrooms, he had no time to follow the media abroad which were full of news about how the main agenda of G20 was about secret banking. He was all at sea. With the first two failing, entered Jairam Ramesh, the campaign manager of the party.

 

Like Sehwag deploying offence for defence, he wrote a harsh letter to L K Advani saying, “to tell bluntly — Mr Advani, you are lying”. Advani, he charged, was lying on his maths about the estimate of the Indian black wealth at between $500 billion and $1400 billion. These numbers, he said, were drawn from questionable Internet sources! All his shouts meant only this: “Mr Advani, the loot from India is not as big as you make it out to be”. But, when the Swiss Ambassador himself has admitted that ‘lot’ of Indian black wealth was flowing into Swiss banks, where is the need to quarrel over how big the loot from India is — as big as Advani says or as small as Jairam Ramesh thinks? The question is where does the Congress stand on the issue of bringing the hoarded Indian wealth from abroad. The three who shout at Advani are deafeningly silent on that.


The Congress campaign manager cites a well-known economist Bibek Debroy who has questioned Advani’s estimate of Indian black wealth at a minimum of $500 billion. Debroy, usually an agile and meticulous analyst, has erred in this case. He has looked at the wrong version of the right report and reached incorrect conclusions. Both Advani and Debroy have relied on the Global Financial Integrity (GFI) study that has estimated the global black wealth stashed away in tax havens including India’s. There are two versions of the GFI study — one a layman’s version and the other, the economists’ version. Debroy, an economist, seems to have relied on the layman’s version. And L K Advani, not an economist, has relied on the economists’ version. The economists’ version of the GFI study (at pages 29 and 30 supported by charts, specifically chart 18) estimates, in specific numbers the amount of black wealth stashed away from India between 2002-06 at $137.5 billion. If, in five years, the amount could be $137.5 billion (Rs 6.88 lakh crore), the Advani estimate of $500 billion (Rs 25 lakh crore) to $1400 billion (Rs 70 lakh crore) for six decades since 1947 is not wide off the mark. Bibek Debroy who seems to have looked at only the layman’s version of the GFI study, appears to have missed the specific estimate of the annual loot from India at $27.3 billion which only the economists’ version of the GFI report mentions. This is the cause of the dispute on maths. But even otherwise all maths of monies held in secrecy can only be estimates. There can be nothing final about it.

 

That lots of Indian black wealth is lodged in secret Swiss banks and elsewhere is undisputed. The dispute is no more about the loot from India. But only about how big that loot is. The Congress masks the undisputed fact of the loot by questioning the maths of it. Obviously the party seems frightened about the Indian black wealth abroad becoming an issue once again after 1987 when the Bofors bribe scam broke out. The Congress spokesmen do not seem to be defending their party. They are actually exposing their leader whose connections with her Italian friend Quattrocchi who got bribes from Bofors out of the defence budget of India are well known. They seem to confirm the cynical ones who ask: “Do we expect those who assisted Quattrocchi to run away with the money caught stolen from India to bring back the Indian black wealth from Swiss banks?”

 

Understand why the Congress chose to hit its own wicket instead of hitting the Advani googly for a six?.

 

http://www.expressbuzz.com/edition/print.aspx?artid=rYnAPNoGwgw=

Partners in public loot: Central Ministers’ travels to Italy/Switzerland, Amar Singh’s 5m. $ donation to Clinton Foundation

 

Jairam, the liar, should answer the issues brought out below about jaunts of UPA ministers to Italy/Switzerland, the source of dollars for Amar Singh who could donate upto $5 m. to Clinton Foundation (before switching sides to support Sonia’s survival in governance and the US nuke deal). That Amar Singh is now talking of exposing CBI as Sonia Bureau of Investigation or Congress Bureau of Investigation. All these are interlinked issues related to the public loot stashed in tax havens. Calling Advani a liar is not the way to act even in dirty criminalized polity of Hindusthan, Jairam. Search your own conscience and read the declarations of the recent G-20 summit about monies in tax havens.

 

How was it possible for Amar Singh to get upto $5 m. to donate to Clinton Foundation? This question should be answered by both Jairam and Amar Singh.

 

Kalyanaraman

 

http://sites.google.com/site/hindunew/public-loot

 

It is important the the PM answers this issue of his ministers travelling to tax havens so often and not giving reports to PMO.

Is he not a weak PM keeping quiet when minsters were not reporting to him even about their trips

1.   71 of the 78 UPA ministers [ besides the PM] have made 786 foreign trips spending about 3,798 days and travelling 1.02 crore Km in 1287 days.

2.   The ministers of UPA gave done foreign travel that will to log enough miles to circle the earth 256 times.

3.   Large number of Congress ministers have visited Italy again and again [Ambika Soni spent 23 days in all in personal trips to Italy—of which 11 days were not disclosed to PMO.]

4.   No less than twenty ministers visited Italy!

5.   Most ministers goes to Italy then to Switzerland and then to Italy –In between if time permits visit India

6.   All ministers who visit Italy also visit Switzerland ? Why? Dal me Kuch Kala Hai!!

7.   Arjun Singh has spent two and half months in several countries and Ashwini Kumar for 3 months. Kapil Sibal has toured USA six times and spent 18 days on a trip to Malaysia and China.?

8.   Renuka Chowdhury totaled 112 days abroad with “personal trips” to Chicago and Singapore.

10.Praful Patel travelled 125 days on personal visit and 57 days on official visits and [Fatmi of  RJD] travelled 14 days on official visit and 181 days on personal visit.

 

11All this is till November 2008--- last year—

Most importantly

     11.Many of them have not given reports to PMO on their “personal trips” which sometimes

           are side trips of official trips.

 This makes Manmohan as a very weak PM since his own ministers even from Congress did not consider the need to report to him

 

Rajiv Gandhi wanted a Government on the ”move” –This UPA government was definitely one which was not just moving but flying to and from Tax Havens.

 

It is time PM releases the full travel list of his ministers, particularly to various tax havens .

 

SOURCE  for data India Today Feb 18-2008

 

The estimates of the money stashed abroad can be inferred from a pioneering study sponsored by Ford Foundation. It is titled ---Illicit Financial Flows from Developing Countries: 2002—2006 -- Global Financial Integrity – [GFI] By Dev Kar and Devon-Cartwright Smith-a project of Ford foundation

[Source: http://www.gfip.org/storage/gfip/executive%20-%20final%20version%201-5-09.pdf]

Financial flows in the context of this report includes the proceeds from both illicit activities such as corruption (bribery and embezzlement of national wealth), criminal activity, and the proceeds of licit business that become illicit when transported across borders in contravention of applicable laws and regulatory frameworks (most commonly in order to evade payment of taxes).

 

a)      In 2006, the most recent year of the Global Financial Integrity-[GFI] study, developing countries lost an estimated $858.6 billion to $1.06 trillion in illicit financial outflows.

b)      Even at the lower end of the range of estimates, the volume of illicit financial  

flows coming out of developing countries increased at a compound rate of 18.2 percent over the 5 year period analyzed for the study.

c)      On average, for the five-year period of this study, Asia accounts for  

approximately 50 percent of overall illicit financial flows from all developing countries.

d) This report shows that the average amount stashed away from India annually during 2002-06 is $27.3 billion. It means that during the 5 year period the amount stashed away is 27.3x5=136.5 billion. It is not that all these amounts had gone to Swiss. It has gone to different tax and secret shelters. The share of Swiss banks in dirty money being a third of the global aggregate, some $ 45 billion out of the 136.5 billion stashed away from India would have been hoarded in these years in Swiss banks. [Pp-30-Source as above]

 e)      The important point is that this is only for 5 years. More amounts were stashed away during the Nehruvian socialist regime. So the loot for 55 years would be several times the about money. In fact in those days the Indian rupee commanded a better value per Dollar. So fewer rupee could get more dollars. So the estimation that the Indian money stashed away may be of the order of $1.4 trillion.

f)       This amount of USD 1.4 trillion is Rs 70 Lakh Crores when our national income is around Rs. 50 Lakh crore

Amar Singh contributed millions to Clinton Foundation

Aziz Haniffa in Washington, DC | December 19, 2008 | 09:23 IST

Samajwadi Party General Secretary Amar Singh contributed anywhere from $1 to $5 million to the Clinton Foundation, and so did industrialist Lakshmi Mittal, chief executive of ArcelorMittal, according to information released by the non-profit organisation set up by the former President Bill Clinton to fund a variety of charitable activities around the world, including combating the scourge of HIV/AIDS.

The Foundation raised a total of $492 million since its inception in 1997 through the end of 2007, from 205,000 donors, including foreign governments, other charitable foundations, trade groups like the Confederation of Indian Industry (which gave anywhere from $500,000 to $1 million), businesses, and individuals who gave as little as $10 each.

The list did not release specific figures, but only provided a range of the contributions made, and neither did it list the occupation or countries of resident of the individual donors. So, it could not be ascertained whether Singh and Mittal gave $1 million or $5 million, or somewhere in-between, as with the CII, whether it gave exactly $500,000 or a $1 million or somewhere in-between.

The figures showed that the Foundation received more than $40 million from Saudi Arabia ($10 to $25 million range) and other Gulf countries, including Kuwait and Qatar and from Oman, Brunei, Norway and Italy.

Earlier, it had refused to disclose details of who the contributors were saying it wanted to maintain their confidentiality, but with President-elect Barack Obama naming former First Lady and Senator Hillary Clinton as his Secretary of State designate, a memorandum of understanding had been hammered out between the Obama and Clinton teams that the Foundation would not only release these names but also submit future Foundation activities and paid speeches by the former President to an ethics review.

Under the terms of the agreement, Clinton was also to absolve himself from the day-to-day operations of his annual Clinton Global Initiative to which several foreign governments and organisations had pledged funds and that the State Department would be kept informed about new contributors, which going forward were unlikely to include foreign governments.

The Foundation's CEO Bruce Lindsay and attorney Cheryl Mills, according to the
Associated Press, had also met with senior aides to Senator John Kerry, incoming chairman of the Foreign Relations Committee and the ranking Republican on the panel, Senator Richard Lugar and apprised them of the MOU between them and the Obama team.

Several television networks like
ABC News and CNN echoed the sentiments expressed by the AP report that 'the list also underscores ties between the Clintons and India, a connection that could complicate diplomatic perception of whether Hillary Clinton can be a neutral broker between India and Pakistan in a region where President-elect Barack Obama will face an early test of his foreign policy leadership'.

The report noted that Singh, an Indian political leader had 'hosted Bill Clinton during a visit to India in 2005 and met Hillary Clinton in New York in September to discuss the Indo-US civil nuclear deal'.

The AP also said, "Some of the donors have extensive ties to Indian interests and could prove troubling to Pakistan," and noted that "tensions between the two nuclear nations are high since last month's deadly terrorist attacks in Mumbai."

In an exclusive interview with
rediff.com, when he visited the US in September, Amar Singh said the specific purpose of his trip at that particular time was to meet with Hillary Clinton to among other things to urge her to push for the consummation of the Indo-US nuclear deal.

He said, "I have had a very close relationship with Hillary Clinton. I had not met her for long. I had a dinner appointment with her yesterday night (September 12), where we spent some quality time together for more than two hours. So, that was the sole purpose of my visit because I thought that I should seize this opportunity to come and interact with her."

When asked how this relation was formed, Amar Singh had said, "Our relationship was formed long time back. We met together in India through Sant Chatwal (New York-based multi-millionaire hotelier and close friend of the Clintons) and thereafter it developed gradually and Mr Clinton came all the way to Lucknow to attend a dinner for me and then in all the Clinton program initiative meetings he has been calling me and interacting with me."
http://www.rediff.com///news/2008/dec/19amar-singh-gave-millions-to-clinton-foundation.htm

 

Amar Singh, Lakshmi Mittal, CII among major donors to Clinton Foundation New York, IANS: Industrialist Lakshmi Mittal, politician Amar Singh, hotelier late Lalit Suri, corporate houses Reliance and Ranbaxy, media house India Today group and Confederation of Indian Industry figure in the list of prominent donors to the Clinton Foundation..


Several Indian big-wigs, including industrialist Lakshmi Mittal, politician Amar Singh, hotelier late Lalit Suri, corporate houses Reliance and Ranbaxy, media house India Today group and Confederation of Indian Industry figure in the list of prominent donors to the Clinton Foundation, according to the information made public on Thursday.

Though the exact amounts donated were not released, steel-tycoon Lakshmi Mittal and Samajwadi Party leader Amar Singh fall in the category wherein they donated between one million to five million US dollars. So did Tulsi R. Tanti-headed Suzlon Energy Limited, which is based in Amsterdam, and is a leading supplier of wind turbines.

A close friend of the Clinton family, successful Indian American entrepreneur Vinod Gupta, donated between quarter million to half a million US dollars, so did hotelier Lalit Suri who died in October 2006. Ajit Gulabchand, chairman and managing director of Hindustan Construction Company (HCC) also made a similar donation.


 

The list of donors was released by the William J. Clinton Foundation, established by the former US President, Bill Clinton, as part of an agreement with the president-elect, Barack Obama, under which he nominated the former First Lady, Hillary Clinton, as his Secretary of State.

"As soon as Senator Clinton was nominated to be Secretary of State, the Foundation staff began working with President-elect Obama's transition team to ensure that not even the appearance of a conflict of interest existed between the Clinton Foundation's operations and Senator Clinton's anticipated service as Secretary of State," the Foundation said in a statement issued in New York.

The Foundation is involved in charitable work particularly in the underdeveloped world and in Africa. A large number of its donors are from outside the US. The biggest donors include the Children's Investment Fund Foundation, UNITAID, Bill and Melinda Gates Foundation, Kingdom of Saudi Arabia and government of Norway.

President Clinton's efforts are unprecedented and go above and beyond what the law requires and are intended to allow the important work of the Foundation to continue.

The Confederation of Indian Industry (CII) donated between half a million to one million US dollars, according to the list released by the Clinton Foundation. Major Indian and Indian American donors in the category of $100,000 to quarter million include the India Today group, Lata Krishnan, Mike Patel, Raani Corporation, Ranbaxy Pharmacuticals and Reliance Europe Limited. 

http://www.deccanherald.com/Content/Dec192008/foreign20081219107645.asp?section=updatenews

----- Original Message -----
To: Her Excellency President of India Smt. Pratibha Devisingh Patil ; Hon'ble Prime Miister of India Dr. Man Mohan Singh ; manmohan@sansad.nic.in ; Hon’ble Chief Justice of India Mr K G Balak rishanan ; speakerloksabha@sansad.nic.in ; Home Minister of IndiaShri P. Chidambaram ; cabinetsy@nic.in ; kcsekhar@ias.nic.in ; hansrajb@sansad.nic.in ; Serious Fraud Investigation Office ; rev_pers@finance.delhi.nic.in ; jsrev@nic.in ; chairman@incometaxindia.gov.in ; member.rev@incometaxindia.gov.in ; member.per@incometaxindia.gov.in ; member.it@incometaxindia.gov.in ; member.aj@incometaxindia.gov.in ; member.leg@incometaxindia.gov.in ; member.inv@incometaxindia.gov.in ; Share Market Ombudsman ; advanilk@sansad.nic.in ; rajnath@sansad.nic.in ; jaswant@sansad.nic.in ; gandhim@sansad.nic.in ; Smt. Sonia Gandhi ; soniagandhi@sansad.nic.in ; aicc@congress.org.inbjpco@bjp.org ; info@spmumbai.org ; jmishra@sansad.nic.in ; thedmk@vsnl.com ; shivsenabhavan@shivsena.org ; shivalaya@shivsena.org ; response@saamana.comrjdal@rediffmail.com ; mail@ncp.org.in ; marxistindia@cpim.org ; cc@cpim.org ; info@trinamoolcongress.com ; pasangma@sansad.nic.in ; drvrajeshwaran@rediffmail.com ; yogi@bom3.vsnl.net.in ; biswasd.aifb@yahoo.co.inbiswasd@sansad.nic.in ; intuchq@del3.vsnl.net.in ; mail@cpiml.org ; jaishriram@vsnl.in ; webmaster@telugudesam.orgshaileshgan@gmail.com ; ashwinikumar001@gmail.com ; ; ; ;
Sent: Monday, April 06, 2009 6:36 AM
Subject: [rti-times] Is MOU signed by India with USB Bank,not a matter ofcriminal connivance, under the Prevention of Corruption Act,1988?

Why Indian Media is silent on such sensitive and Important issue concerned to National Importance? 

According to a News Item published in the Hindi Daily Newspaper: Navbharat Times, Delhi Edition, dated 4th April, 2009, prepared by Shri Ranjeet Kumar, it is reported that UBS Bank of Switzerland and the Government of India singed an MOU, according to which Banks from the Switzerland will expose the name of the Bank Account Holders of India and would given to Government of India, but such Accounts cannot be seized and operation cannot be stopped. If this News is correct, which means, the respective Public Servants from Government of India, who were engaged in negotiation and if signed such MOU, they are liable for prosecution under the Prevention of Corruption Act, 1988, for entering in criminal connivance with the Powerful but Corrupt Politicians, Bureaucrats and Criminals including terrorists, with clear understanding to protect their huge black money deposited in Switzerland in serious violation of FEMA and NSA. This is also to be answered by the Government of India, whether respective Public Servants also entered in any criminal connivance to protect alleged $2 Billion Dollars allegedly deposited by KGB of USSR in the Account of (Late) Rajiv Gandhi, the husband of Smt. Sonia Gandhi, as was alleged in a full page advertisement published on 6th October, 2007, in the New York Times, interalia with the very serious allegation that Shri Rajiv Gandhi, the husband of most powerful lady of Indian Politics, Smt. Sonia Gandhi, is alleged to have received payments from KGB. According to Schweizer, Illustrierte, Rajiv has a secret Swiss Bank account of 2 billion dollars. Her son Shri Rahul Gandhi, who is projected (by Congress Party) as future Prime Minister of India, was also detained by FBI, with the large sum unaccounted cash at Boston Airport in 2001. Every Indian, barring people having under politcal influence of the Congress Party, wants to know whether Mr. (Cleen) Rajiv Gandhi can play in the hands of a foreign State? or the aforesaid advertisment published in the New York Times is an political game plan of some one.

Dr. Subramanium Swamy, also posted the same matter in his Website: http://www.janataparty.org/kgb_sonia.html in the page under heading : "SONIA'S KGB CONNECTIONS" and posted as follows:-


"Such has been the patronage from the beginning extended to Sonia Gandhi and her Italian family from the Soviets. When a Prime Minister of India’s son dates a girl in London, the KGB which valued Indo-Soviet relations, would naturally investigate her. They had, and found out that she was the daughter of Stefano, their old reliable Italian contact. Thus, Sonia married to Rajiv, meant deep access for the Soviets, into the household of the Indian Prime Minister. Hence cementing the Rajiv-Sonia relations was in the Soviet national interest and they went to work on it. And they did, through their moles in the Indira Gandhi camp.

 
After her marriage to Rajiv, the Soviet connection with the Mainos was fortified and nurtured by generous financial help through commissions and kick-backs on every Indo—Soviet trade deal and defence purchases. According to the respected Swiss magazine, Schweitzer Illustrate [November 1991 issue; see Annexure-10] Rajiv Gandhi had about $2 billion in numbered Swiss bank accounts—which Sonia inherited upon his assassination.

Dr. Yevgenia Albats, Ph.D[Harvard], is a noted Russian scholar and journalist, and was a member of the KGB Commission set up by President Yeltsin in August 1991. She was privy to the Soviet intelligence files that documented these deals and KGB facilitation of the same. In her book—“The State Within a State: The KGB in the Soviet Union”, she even gives the reference numbers of such intelligence files
[see Annexure-11] which can now be accessed by any Indian government through a formal request to the Kremlin.
 
The Russian Government in 1992 was confronted with the Albats’ disclosure by the media. The official spokesperson of the government confirmed the veracity of the disclosure [which was published in Hindu in 1992; see Annexure-12]. The spokesperson defended such financial payments as necessary in “Soviet ideological interest”. Part of the funds were used by the Maino family to fund loyal Congress party candidates in the General Elections [see Annexure-13].
 
When the Soviet Union disintegrated in 1991, things changed for Ms. Sonia Gandhi. Her patron nation had been disbanded into 16 countries. The rump that became Russia was in a financial mess and disorder. So, Ms. Sonia Gandhi switched and became a supporter of another communist country much to the annoyance of the Russians.
 
The national security ramification of this ‘annoyance’ is now significant: The President of Russia today is Putin, a former dyed-in-the-wool KGB officer. Upon Dr. Manmohan Singh’s government taking office, Russia called back it’s career diplomat Ambassador in New Delhi and immediately posted in his place, as the new Ambassador, a person who was the KGB station chief in New Delhi during the 1970s.
 
In view of Dr. Albats revelation, it stands to reason that the new Ambassador would have known first hand about Sonia’s connections with the KGB. He may have in fact been her “controller” and local contact. The new Indian government today which is defacto Sonia’s, cannot afford to annoy him or even disregard Russian demands that come from him. The Sonia coterie will obviously seek to placate him so as not to risk exposure. Is this not a major national security risk for India and a delicate matter for the nation’s sovereignty?
Of course, all Indians would like good normal and healthy relations with Russia. Who can forget their assistance to us in times of need? Today’s Russia is the residual legatee of that Soviet Union which helped India. But just because of that, should we tolerate those in our government set up having clandestine links with a foreign spy agency? In the United States, the government did not tolerate an American spying for Israel even though the two countries are as close as any two countries can be. National security and friendship are as different as chalk and cheese.
 
In December 2001, I had filed a Writ Petition in the Delhi High Court with the photocopies of the KGB documents, and sought a CBI investigation which the Vajpayee Government was stoutly refusing. Earlier, Minister of State for CBI, Vasundara Raje[now Rajasthan CM], on my letter dated March 3, 2001, had ordered the CBI to investigate. But after Sonia Gandhi and her party stalled the proceedings of Parliament on this issue, the then Prime Minister Vajpayee overruled and cancelled Vasundara’s direction to the CBI.
 
The Delhi High Court in May 2002 issued a direction to the CBI to ascertain from Russia the truth of my charges. The CBI procrastinated for two years, and finally told the Court that without an FIR registered, the Russians will not entertain any such query. But who stopped the CBI from registering an FIR? The Vajpayee government! And why? Thereby hangs another tale.
 
The next hearing of the case is imminent. But now Sonia is in the driver’s seat, and the CBI has been reduced in independence even further."
Other Pages are posted in aforesaid Website are as under:-
http://www.janataparty.org/soniaintro.html

http://www.janataparty.org/threelies.html 

http://www.janataparty.org/sonia.html 

http://www.janataparty.org/lawsofindia.html

http://www.janataparty.org/soniaisthemodern.html

However, the attitude of Government of India, as reflected from above News published in the Navbharat Times, is more serious in consideration of the following disclosure: Indian black money in the Vatican Bank  - by Ram Narayan 03 Apr 2009 Topic: Can social evils be banished by law alone?

http://content.msn.co.in/MSNContribute/Story.aspx?PageID=ee8e9d5a-9a16-46d5-8390-39e00d7d2d17

This refers to S. Gurumurthy 's edit page article "Secret wealth abroad" in The New India Express, Chennai, (April 2). If the Indian citizen who has stashed money abroad is a Roman Catholic by religion and holds a valid baptismal certificate issued by a parish priest, his or her pay-backs and black money is likely to be hidden in the Vatican Bank (called The Institute for Works of Religion or IOR). Vatican City in the center of Rome is a internationally recognized independent city-state, and Italian government revenue officials are not able to enter its 100 acre area without permission from Vatican City 's Secretary of State. The Vatican Bank within the Vatican 's walls has a notorious reputation for secrecy and its connection to the Italian mafia. For many years in the 1980s, the bank's archbishop director could not enter Rome for fear of arrest. Neither India nor any other country looking for money kept by its citizens in this bank, will be able to access the accounts held in this infamous Roman Catholic financial institution.

Rome also hosts another notorious bank similar to the Vatican Bank, in the headquarters of the Roman Catholic militant religious order Knights of Malta. The Knights of Malta building in Rome is also designated an autonomous state (it issues its own passports to the Order's member-citizens) and its bank also operates outside of all international rules and regulations. Money kept in its accounts by Roman Catholics of any nation who belong to the Order is secret and safe and outside Italian and Indian government review.Though Germany , France , England and the US are interested in going after the money hidden by their citizens in overseas tax havens, the Indian government is not so eager to do so. It knows very well that some very high profile political leaders in the country keep their pay-backs in Switzerland and Catholic holy places abroad. 

TRUTH SHALL ALWAYS PREVAIL
Milap Choraria 
Editor: Suchna Ka Adhikar / RTI TIMES
National Convenor :
Movement for Accountability to Public (MAP)
http://milapchoraria.tripod.com/msp http://rtitimes.net

G-20 and action on recovering public loot from tax havens

Name ministers who visited Switzerland, Advani tells PM

 

Name ministers who visited Switzerland, Advani tells PM

MAHESH JOSHI Posted online: Apr 06, 2009 at 0017 hrs

Aurangabad : Stepping up pressure on the UPA Government over the black money stashed in secret accounts of the Swiss banks, the BJP's prime ministerial candidate L K Advani on Sunday asked Prime Minister Manmohan Singh to release a list of his Cabinet ministers who visited Switzerland without any official purpose.

Reiterating that Rs 25-70 crore were stashed in various foreign bank accounts by Indian citizens, Advani assured the people that if voted to power, the NDA Government would bring the wealth back to the country. This money belonged to the poor farmers, the landless and the workers of India who were in acute financial distress today, he said here while he was on his way to Degloor of Nanded district to address an election rally of the BJP-Shiv Sena candidate Sambhaji Pawar.

The BJP senior leader said he had written a letter to the Prime Minister on the issue and had also taken it up at a press conference in New Delhi against the backdrop of the PM's visit to the G20 summit in London. “What is surprising is that the

PM did not mention this point in his opening statement to the press on the conclusion of the G20 summit. Later, in his lengthy speech at the official dinner hosted by Britain's PM Gordon Brown, Singh alluded to this matter casually,” he added.

Advani said as the PM had failed to take up this matter with the global community, he should release the details of the travel destinations of his Cabinet ministers in the last five years, mentioning in

particular the trips to Switzerland and other tax havens, which were not part of official tours.

He asked why India did not take up the issue of Swiss banks while the developed countries in the Organisation for Economic Cooperation and Development had treated the issue with due seriousness.

http://www.indianexpress.com/news/name-ministers-who-visited-switzerland-.../443461/

 

Brown to call in banks on new G20 rules

Mon Apr 6, 2009 7:28am BST

LONDON (Reuters) - Prime Minister Gordon Brown said on Sunday he would be calling in the heads of banks to discuss how new international rules on supervision of tax havens agreed at the G20 will be implemented.

He said this process would start on Monday with an initial meeting with Bank of England Governor Mervyn King and other top economic officials.

Chancellor Alistair Darling, Financial Services Authority Chairman Adair Turner and Trade and Investment Minister Mervyn Davies will also take part in the meeting, officials confirmed on Saturday.

"I am going to call the banks in, and the Governor of the Bank of England is coming to see me on Monday," Brown told Sky news in an interview recorded after the NATO summit in Strasbourg on Saturday.

"We have got to make sure that all this new regulation and supervision is effected in Britain. We have got to make sure that the tax havens that have got some relationship with Britain are conducting their affairs in such a way to justify the decisions that we made at the G20 that change is going to happen."

Britain will call on a number of territories that have not yet implemented pledges to sign agreements to exchange tax information with other countries to do so as soon as possible.

At Thursday's G20 summit of leading industrial and developing economies in London, world leaders clinched a $1.1 trillion (7.4 billion pounds) deal to combat the worst economic crisis since the Great Depression and said financial rules would be tightened.

The summit promised a crackdown on jurisdictions that failed to cooperate in cross-border tax evasion cases.

Pushed by France and Germany, the G20 agreed that countries should sign up to global rules on sharing tax information or risk being placed on a blacklist.

A number of territories that have not yet implemented pledges to exchange information figure on a "grey list" published by the Organisation for Economic Cooperation and Development, including Bermuda, the Cayman Islands, Gibraltar and Turks and Caicos Islands.

Brown also stressed that the economy was his overriding priority when asked if he would consider calling an election after one opinion poll gave him a healthy post-G20 summit boost.

"I am not going to get into talk about dates. We have got to show people how we can take the country through this difficulty," he said.

A YouGov poll for the Sunday Times showed Labour had cut the Conservative lead to seven points as voters expressed their approval of the $1.1 trillion global economic stimulus package.

"Our first priority, and it is our first priority, is jobs and it's homes and it's businesses. That's the only thing on my mind at the moment -- how we can take the action that is necessary to take us through this downturn," he said.

Brown must go to the polls by mid-2010.

(Reporting by Frank Prenesti and Adrian Croft; Editing by Mike Nesbit)

http://uk.reuters.com/article/UKNews1/idUKTRE53328V20090406

 

Swiss, Liechtenstein: ready for G20 tax haven list

By ALEXANDER G. HIGGINS and FRANK JORDANS – 3 days ago

GENEVA (AP) — Switzerland said Thursday it has put into motion plans to cooperate on rooting out tax cheats, but critics questioned whether that would sufficiently dismantle banking secrecy as demanded by the Group of 20 economic powers.

Liechtenstein, Switzerland's tiny Alpine neighbor, said it has already started negotiating with British officials and is ready to implement tough new standards.

The two countries are among a number of offshore banking centers that have accepted new guidelines in recent weeks as part of the campaign by the United States, Germany, France and Britain to crack down on tax evaders stashing their money abroad.

In return they were spared the fate of being blacklisted on a new register of uncooperative tax havens published Thursday by the Organization for Economic Cooperation and Development at the behest of the G-20. However, they were left in a gray area with a number of countries that still have to implement their commitment to accept new information-exchange standards.

Swiss President Hans-Rudolf Merz said he welcomed measures agreed at the G-20 meeting in London to spur economic recovery and could see that "the question of banking secrecy and administrative assistance in tax questions is receiving the highest attention."

The Swiss Cabinet foresaw the G-20 action and had decided March 13 to accept international standards in cooperating with other countries by taking appropriate measures.

But Switzerland has only committed itself so far to provide banking information when it receives evidence backing up suspicion that a suspected individual is engaged in tax evasion.

The Swiss Bankers Association regretted the listing of Switzerland in the gray area.

"Switzerland doesn't belong on such a gray list," said spokesman Thomas Sutter. "It had accepted all the measures that were demanded by the G-20 countries before the meeting."

Nonetheless, Sutter said, the Swiss Bankers Association will support the Swiss Cabinet in the upcoming negotiations for tax treaties with other countries.

Max Hohenberg, spokesman for the Liechtenstein government, said: "We have already declared that we will accept the OECD standards, so we view this announcement with a certain calmness. For Liechtenstein it's simply a matter of implementing the standards. We want to resolve this issue once and for all."

Matti Kohonen of the London-based Tax Justice Network, which campaigns against tax loopholes for rich individuals and corporations, welcomed the high priority the G-20 put on rooting out tax havens in its list of economic initiatives.

Kohonen noted that in the two weeks leading up to the G-20 meeting in London a number of tax havens signed up to new banking agreements in hopes of avoiding being listed as uncooperative.

However, he said, the proposed information exchange treaties "are based on request and on suspicion. But how can you have suspicion on secret accounts, so there will be very few cases put forward."

Kohonen said the information exchange treaties should go beyond individuals' bank accounts and include companies.

"Commodity trading takes place largely through offshore vehicles," he said. "There should be a reform of international accounting standards to country-by-country reporting where offshore affiliates are listed as subsidiaries."

Associated Press writer Balz Bruppacher in Bern contributed to this report

http://www.google.com/hostednews/ap/article/ALeqM5gKW2U8v4YdFSFdITNoZPoPiUjL6AD97AGM0G0

 

Your guide to the G20 blitz on tax havens

Austria, Andorra, Belgium, Luxembourg and Switzerland withdrew OECD reservations. Hong Kong, China, Monaco, Singapore join

 

Ali Hussain (April 5, 2009, Sunday Times, London)

 

The crackdown on tax evaders intensified last week with G20 leaders promising to stop the rich from salting away vast sums in offshore havens.

Pressure is mounting as more countries declare their intention to share information with foreign governments that suspect citizens of tax evasion.

Stalwarts of tax secrecy such as Switzerland, Liechtenstein and Monaco have all said they will adopt tax-sharing principles set out by the Organisation for Economic Co-operation and Development (OECD).

Tens of thousands of British people have offshore accounts — many of them offered by high-street banks and building societies such as Nationwide and Alliance & Leicester in the Isle of Man. This is usually for entirely legitimate reasons — perhaps because they have worked abroad or intend to retire overseas.

Offshore accounts may also pay higher interest than their onshore equivalents, and this is paid gross — although you are required to declare it every year.

HM Revenue and Customs (HMRC) is negotiating an “offshore disclosure facility” (OFD) with Liechtenstein, where it would close the accounts of UK residents who have not paid their tax and who did not come forward voluntarily. It intends to extend this to countries such as Jersey, Switzerland and Monaco.

Not all countries have agreed to share information, however. Some “die-hard tax evaders” are expected to move money to countries such as Panama or Samoa, which have not agreed to share information.

Here we explain where we are with offshore tax.

What’s the problem?

People have until recently held money in offshore accounts and not declared their income to the taxman. However, with the onset of the credit crunch, and taxpayers having to bail out banks — many of them with offshore interests — tax evasion has risen on the political agenda.

HMRC says offshore tax evasion costs British taxpayers £900m to £1.5 billion every year, although the Tax Justice Network, a campaigning group, estimates that the figure is more like £18.5 billion.

What is a tax haven?

Jersey, Guernsey, the Isle of Man, the Cayman Islands, Monaco and the Bahamas are attractive places to keep money because taxes are lower, or non-existent. Monaco does not levy personal income tax; the Cayman Islands do not have capital gains tax (CGT); and the Bahamas do not charge CGT or income and inheritance tax.

Many of these tax havens previously refused to share banking information with other governments unless some form of criminal activity was involved.

What has been done about it?

The OECD set out a framework for sharing tax information in 2000. Most OECD members and a few non-OECD countries agreed in principle that information should be available on request where it is foreseeably relevant to the domestic laws of a treaty partner. However, Andorra, Monaco and Liechtenstein failed to agree with OECD standards and Austria, Belgium, Luxembourg and Switzerland had reservations.

So what’s happened now?

In recent weeks many previously reluctant countries have agreed to adopt the OECD standards after they were threatened with blacklisting. Austria, Andorra, Belgium, Luxembourg and Switzerland withdrew their reservations while Hong Kong, China, Monaco, and Singapore agreed to adopt the standards this year.

Is the OECD framework legally binding?

No. Countries that adopt the standards must then sign a tax information sharing agreement (TIEA). These are bilateral agreements that enshrine the OECD principles into law.

Britain has signed TIEA agreements with Jersey, Guernsey, British Virgin Islands, Isle of Man and Bermuda. It is in the process of signing an agreement with Liechtenstein. None of these agreements has yet been ratified, though.

Didn’t EU states share information?

A separate agreement called the European Savings Directive was signed in June 2003 (adopted in 2005) and applied to all European Union countries. This allowed the automatic sharing of relevant tax information between member states. So Spain could seek details of a tax evader in Britain and vice versa.

However, some EU countries — Austria, Belgium and Luxembourg — said they would like time to adjust. They chose instead to allow account holders to either pay a “withholding tax” or declare their income to the authorities in their home countries. By paying the withholding tax, their details would remain anonymous. Jersey, the Isle of Man and Guernsey, which are not part of the EU, also adopted this policy. Withholding tax was deducted at source at a rate of 15%, rising to 20% in July 2008 and then 35% by 2011. The idea is that, as the rate increases, it becomes less worthwhile to hold money offshore or not declare it to the relevant authorities.

UK residents still have to declare how much tax is owed to HMRC, although their withholding tax payment will be taken into consideration under double taxation rules. For higher-rate taxpayers who have paid 20% in withholding tax, the onus is on them to pay the additional 20%. Paying the withholding tax, but not declaring, would be breaking the law.

If I pay the withholding tax will my details be automatically shared under this latest agreement?

No. TIEA agreements stipulate that HMRC must first name an individual and give reason to an offshore jurisdiction why details should be disclosed. This means someone with interests in these jurisdictions could potentially evade tax. However, HMRC says it has a number of ways to work out who hasn’t paid enough tax.

What is the offshore disclosure facility?

This was opened in spring 2007 and applied to those with offshore accounts in five high-street banks that had offshore offices. People had until November of that year to declare their tax liability and to pay it, with a 10% fine. More than £400m was raised in this way.

Those who failed to step forward will be subject to a criminal investigation — if HMRC knows who they are. A spokesman for HMRC said a number of investigations were under way.

Will there be another disclosure facility?

The government has already indicated it will offer a new OFD this year. Details have yet to emerge. If the experiment with Liechtenstein works, HMRC says it will adopt that as the new model — in other words, people could have their accounts closed if they do not come forward voluntarily.

Are there legitimate reasons for holding money offshore?

There are, but mainly for those defined as non-domiciled — someone claiming a link with another country, such as birth.

What if I’m domiciled in the UK?

If you are UK resident, you can benefit from an offshore account by not having to pay tax at source. You have to declare your gains in a tax return at the end of January, but you benefit from gross interest rolling up until that point. This is not always cheap, however, as you may need to pay management fees to service an offshore account.

Are there places still off limits to HMRC?

Some countries, including Panama and Samoa, have not agreed to share any information with foreign authorities, leading to fears that some people might simply shift their money to these jurisdictions to avoid tax. Mike Warburton, of Grant Thornton, the tax adviser, said: “You don’t have to be a rocket scientist to work out that if pressure is being applied in certain areas, individuals intent on avoiding tax will move their money elsewhere.”

Tax experts are admitting that they are receiving e-mails from lawyers in Panama who are touting for business and boasting: “We are now the only tax haven.” Panama Law (panamalaw.org ) will set up an account in Panama through its UK office.

Offshore accounts explained

If you are a UK resident and domiciled here, you can hold an offshore account, but you must declare the interest to the Revenue every year.

People take out offshore accounts because the interest is paid gross; to get gross interest onshore you have to fill in form R85. Savers also benefit from a “gross roll-up” (earning interest on gross interest).

Offshore accounts can also be useful if you are a UK resident who works abroad for extended periods, or who intends to retire abroad.

Jersey, the Isle of Man and Guernsey now subscribe to the “withholding tax” regime, where 20% tax is automatically deducted in return for your details remaining anonymous. Higher-rate taxpayers are still liable to pay the remaining 20% through their tax return, however.

Under the new proposals being negotiated by the Revenue, overseas jurisdictions could close the accounts of people suspected of not having paid tax and or having failed to declare liabilities voluntarily.

http://www.timesonline.co.uk/tol/money/tax/article6035071.ece

China’s Dollar Trap

By PAUL KRUGMAN April 3, 2009 New York Times

 

Back in the early stages of the financial crisis, wags joked that our trade with China had turned out to be fair and balanced after all: They sold us poison toys and tainted seafood; we sold them fraudulent securities.

But these days, both sides of that deal are breaking down. On one side, the world’s appetite for Chinese goods has fallen off sharply. China’s exports have plunged in recent months and are now down 26 percent from a year ago. On the other side, the Chinese are evidently getting anxious about those securities.

But China still seems to have unrealistic expectations. And that’s a problem for all of us.

The big news last week was a speech by Zhou Xiaochuan, the governor of China’s central bank, calling for a new “super-sovereign reserve currency.”

The paranoid wing of the Republican Party promptly warned of a dastardly plot to make America give up the dollar. But Mr. Zhou’s speech was actually an admission of weakness. In effect, he was saying that China had driven itself into a dollar trap, and that it can neither get itself out nor change the policies that put it in that trap in the first place.

Some background: In the early years of this decade, China began running large trade surpluses and also began attracting substantial inflows of foreign capital. If China had had a floating exchange rate — like, say, Canada — this would have led to a rise in the value of its currency, which, in turn, would have slowed the growth of China’s exports.

But China chose instead to keep the value of the yuan in terms of the dollar more or less fixed. To do this, it had to buy up dollars as they came flooding in. As the years went by, those trade surpluses just kept growing — and so did China’s hoard of foreign assets.

Now the joke about fraudulent securities was actually unfair. Aside from a late, ill-considered plunge into equities (at the very top of the market), the Chinese mainly accumulated very safe assets, with U.S. Treasury bills — T-bills, for short — making up a large part of the total. But while T-bills are as safe from default as anything on the planet, they yield a very low rate of return.

Was there a deep strategy behind this vast accumulation of low-yielding assets? Probably not. China acquired its $2 trillion stash — turning the People’s Republic into the T-bills Republic — the same way Britain acquired its empire: in a fit of absence of mind.

And just the other day, it seems, China’s leaders woke up and realized that they had a problem.

The low yield doesn’t seem to bother them much, even now. But they are, apparently, worried about the fact that around 70 percent of those assets are dollar-denominated, so any future fall in the dollar would mean a big capital loss for China. Hence Mr. Zhou’s proposal to move to a new reserve currency along the lines of the S.D.R.’s, or special drawing rights, in which the International Monetary Fund keeps its accounts.

But there’s both less and more here than meets the eye. S.D.R.’s aren’t real money. They’re accounting units whose value is set by a basket of dollars, euros, Japanese yen and British pounds. And there’s nothing to keep China from diversifying its reserves away from the dollar, indeed from holding a reserve basket matching the composition of the S.D.R.’s — nothing, that is, except for the fact that China now owns so many dollars that it can’t sell them off without driving the dollar down and triggering the very capital loss its leaders fear.

So what Mr. Zhou’s proposal actually amounts to is a plea that someone rescue China from the consequences of its own investment mistakes. That’s not going to happen.

And the call for some magical solution to the problem of China’s excess of dollars suggests something else: that China’s leaders haven’t come to grips with the fact that the rules of the game have changed in a fundamental way.

Two years ago, we lived in a world in which China could save much more than it invested and dispose of the excess savings in America. That world is gone.

Yet the day after his new-reserve-currency speech, Mr. Zhou gave another speech in which he seemed to assert that China’s extremely high savings rate is immutable, a result of Confucianism, which values “anti-extravagance.” Meanwhile, “it is not the right time” for the United States to save more. In other words, let’s go on as we were.

That’s also not going to happen.

The bottom line is that China hasn’t yet faced up to the wrenching changes that will be needed to deal with this global crisis. The same could, of course, be said of the Japanese, the Europeans — and us.

And that failure to face up to new realities is the main reason that, despite some glimmers of good news — the G-20 summit accomplished more than I thought it would — this crisis probably still has years to run.

http://www.nytimes.com/2009/04/03/opinion/03krugman.html?_r=1&hpw=&pagewanted=print

$11 trillion parked in tax havens: OECD; Mitrokhin archives; immunity to looters

$11 trillion parked in tax havens: OECD

4 Apr 2009, 0130 hrs IST, AGENCIES

 

LONDON: OECD (Organisation for Economic Cooperation and Development) a group of rich countries said that according to its estimate, $11 trillion is parked in tax havens, which is more than 10 times the total amount committed by the G-20 leaders to revive the global economy.

It named four countries Philippines, Costa Rica, Malaysia and Uruguay as non-cooperative tax havens. The OECD also named as many as 39 countries, including Switzerland and Luxembourg, which are not fully-compliant with the international tax standards. The list has been published after the leaders of G-20 nations on Thursday decided to crack down on tax havens and agreed to exchange informations on tax upon request.

According to OECD, the four countries Costa Rica, Malaysia, Philippines and Uruguay have not committed to internationally agreed tax standards, while the rest have committed but not "substantially" implemented the same.

Apart from Switzerland and Luxembourg, other names in the list include Liechtenstein, Austria, Belgium, Chile, Brunei, Guatemala, Singapore, Cayman Islands, Bermuda, Netherlands, Liberia, Bahrain and Bahamas.

The grouping of developed nations has also named 40 countries, which have substantially implemented the international tax standards. The list includes Mauritius, the country from where large amount of investments are routed into India.

The OECD takes into account many factors to determine a jurisdiction as a tax haven, including whether the country imposes "no or only nominal taxes". Other criteria includes lack of transparency and whether laws prevent exchange of information related to tax with other governments.

Other nations which have not substantially implemented international tax standards are Andorra, Anguilla, Antigua and Barbuda, Aruba, Belize, British Virgin Islands, Cook Islands, Dominica, Gibraltar, Grenada, Marshall Islands, Monaco, Montserrat, Nauru, Antilles and Niue.

The list also has names of Panama, St Kitts and Nevis, St Lucia, St Vincent & Grenadines, Samoa, San Marino, Turks and Caicos Islands and Vanuatu.

 

http://timesofindia.indiatimes.com/Business/11-trillion-parked-in-tax-havens/articleshow/4356602.cms

 

http://www.oecd.org/dataoecd/23/13/42469606.pdf Countering offshore tax evasion: the role of the OECD

http://www.oecd.org/dataoecd/32/45/42356522.pdf Overview on OECD work on harmful tax practices

 

BJP must seek KGB papers

Ashok Malik  (Pioneer, Saturday, April 4, 2009
)

In arguing that an investigation into Indian slush funds in Switzerland, Liechtenstein and other secret banking havens should be a priority for the next Government, the BJP has made a noteworthy recommendation. The quantum of Indian-origin money — political bribes, contractual paybacks, receipts against contraband taken out of the country, corporate embezzlement and so on — may be speculated upon. The modalities of finding it and claiming it on behalf of the law may be debated. Yet, the principle is unexceptionable.

There is, however, one other inquiry with international ramifications that the BJP must commit itself to, should it come to power on May 16. Indeed, it is the only party without the baggage and with the positioning to do this — to study the Indian links in the
Mitrokhin Archive.

As is well known, the Mitrokhin papers are the largest repository of KGB documents ever removed from the Soviet Union/Russia. In 1992, Vasili Mitrokhin, a senior archivist at the KGB who had copied and pilfered thousands of top-secret files over the years, defected to the United Kingdom with his treasure.

The
Mitrokhin Archive is in the custody of MI-6, the British external intelligence agency. A small, extremely sanitised portion of the KGB papers was published after vetting by London’s intelligence and political establishment as the Mitrokhin Archive I (1999) and the Mitrokhin Archive II (2005).

The first book dealt with the KGB’s network of spies, agents and front organisations in Europe and the West. Volume II described the phenomenon in Asia, Latin America and Africa. The second book devoted two chapters to India, which it called “the Third World country on which the KGB eventually concentrated most operational effort during the Cold War”.

The KGB,
Mitrokhin Archive II alleged, routinely bribed Left and Congress politicians, including Ministers in Mrs Indira Gandhi’s Government. It bought secrets and paid retainers. The KGB funded election campaigns of chosen candidates and parties, including supporting the Congress in its years out of power (1977-79), and operated through a network of recruits in the intelligentsia, the media and the civil service, in addition to, of course, political proxies.

The Mitrokhin books were careful not to mention too many proper nouns, largely restricting themselves to naming people who were dead, or referring to KGB code names and broad descriptions of individuals and institutions. However, the chapters on India offer tantalising clues and often mention some names in other contexts, as if pointing the reader in the right direction.

Take this extract: “The Indian Embassy in Moscow was being penetrated by the KGB, using its usual varieties of the honey trap. The Indian diplomat PROKHOR was recruited, probably in the early 1950s, with the help of a female swallow, codenamed NEVEROVA, who presumably seduced him. The KGB was clearly pleased with the material which PROKHOR provided, which included on two occasions the Embassy codebook and deciphering tables, since in 1954 it increased his monthly payments from 1,000 to 4,000 rupees.”

PROKHOR is not identified. However, a pro-Soviet Indian diplomat who rose to the highest positions in South Block is quoted in the book in an otherwise harmless sentence. Old timers in Delhi have put two and two together and concluded that the gentleman — now dead — may have been PROKHOR.

Mitrokhin Archive II was published in September 2005, and much of what it contained in reference to India was reported in the media. So why is it relevant today?

The fact is the book was only a teaser trailer, all that was allowed to be shared with lay readers. MI-6 and the British Foreign Office have made it clear that friendly countries and intelligence agencies are free to request access to the Mitrokhin papers, or at least to those sections and dossiers that concern them.

The foreword to
Mitrokhin Archive II says, “A report by the all-party British Intelligence and Security Committee (ISC) reveals that a series of other Western intelligence agencies have also proved ‘extremely grateful’ for the numerous CI (counter-intelligence) leads provided by Mitrokhin’s material.”

Aside from Britain, the United States, Germany and Italy are among the countries that have used the KGB papers to uncover spies and traitors among their own people, in their Government and security systems.

Consider the response in India. When the Mitrokhin details became public three-and-a-half years ago, the Congress, the CPI(M) and the CPI combined to disparage them. Parliamentary discussion was stonewalled. Mr Anand Sharma, then the Congress spokesperson and now the Minister of State for External Affairs, even said, “There has been no precedent when fictional accounts are discussed in Parliament.”

Together as allies in 2005 — as they were as fellow travellers in the 1970s — the Congress and the Left joined forces to bury the Mitrokhin scandal. Among the major democracies, India is perhaps the only one that has not formally requested access to the
Mitrokhin Archive and not asked MI-6 if the papers could help authorities in New Delhi identify those who were passing on information to Moscow, in return for monetary or other benefit.

Some of these people are gone but many may still be alive, living as respectable citizens, perhaps still attempting to determine the course of Indian public policy and diplomatic choices. It is also possible that most of them are just too old and living a quiet retirement. Either way, India deserves to know the truth — not necessarily to send every one of these people to prison, but to arrive at a proper closure to a disquieting chapter in its modern history.

A start can only be made if the Government of India writes to its British counterpart, asking it be allowed to study the Mitrokhin papers. There is, however, a conspiracy of silence. For obvious reasons, the Congress and the Left will not do it. The gaggle of opportunistic socialist and regional parties that straddle the UPA and the NDA will not be interested either. Only the BJP represents a political philosophy that had nothing to do with the KGBisation of India’s polity in the Cold War years.

That is why the BJP must promise that, should it win the election, it will begin the process of unravelling the truth hidden in the
Mitrokhin Archive. Indian money needs to be redeemed from Swiss banks; so does Indian honour from KGB extension counters.

(malikashok@gmail.com) http://www.dailypioneer.com/167186/BJP-must-seek-KGB-papers.html

 

BJP mulls black cash pardon

PIYA SINGH (Telegraph, Kolkata)        

 

Global tax havens: 70

Assets parked: $1.7 to 11.5 trillion

Indian black money: $200 to $500 billion

Preferred havens: Switzerland, Mauritius, Austria, Liechtenstein, Isle of Man and the Cayman Islands

April 3: If the BJP is voted to power, it could come out with an amnesty scheme to force tax dodgers to bring back the billions of dollars they have stashed away in Swiss banks and other tax havens around the world.

“The usual model is to offer an immunity on tax payments that can extend to six months,” said S. Gurumurthy, the chartered accountant who has been named a member of a task force formed by the BJP to help ferret out information about the cash mountain abroad.

If an amnesty scheme is offered, it will be only the second since the process of economic liberalisation began in 1991.

P. Chidambaram, who was the finance minister in the H.D. Deve Gowda government, had announced a voluntary disclosure of income scheme (VDIS) in the budget in 1997. The VDIS — which was operational between June and December 1997 — was one of the most successful black money schemes and had raised Rs 10,000 crore.

The BJP released its manifesto today which said: “We will take determined steps to bring back the money (estimated at Rs 25,000 crore and Rs 75,000 crore) illegally stashed in Swiss bank accounts and tax havens and use it for infrastructure development, housing, health and social welfare schemes.”

The manifesto added that if this sum was recovered, the government would be able to allocate Rs 4 crore to every Indian village.

The G20 has also announced a crackdown on tax havens, following which the Philippines, Uruguay, Costa Rica and the Malaysian territory of Labuan have been named the worst offenders. The four are usually not preferred by Indians. The G20 has also threatened to slap sanctions on havens that refuse to exchange information.

Prime Minister Manmohan Singh endorsed the G20’s call yesterday but the Congress manifesto has been silent on the issue.

Along with Gurumurthy, the BJP named three other members to the task force: R. Vaidyanathan, a professor of finance at the Indian Institute of Management, Bangalore; Mahesh Jethmalani, a lawyer and the party’s candidate against Priya Dutt, and Ajit Doval, a national security expert. All of them have agreed to work voluntarily on this task force.

“India is the only country that has not taken an aggressive position on tax havens. They have not uttered a word against tax havens which means that they are happy with them,” Gurumurthy told The Telegraph.

Gurumurthy said the task force would try and determine how much money had been spirited abroad. He said Raymond Baker, a researcher on corruption and money laundering, had estimated that about $137 billion had been taken out of India between 2002 and 2006.

A study conducted by Baker’s organisation, Global Financial Integrity, and sponsored by the Ford Foundation reckoned that $27.3 billion was sucked out of the country every year.

“The task force is in touch with Raymond Baker and we are trying to work with him,” Gurumurthy said.

http://www.telegraphindia.com/1090404/jsp/frontpage/story_10772682.jsp

Nationalise the loot kept in tax havens by Indian citizens and corporates

Hindusthan should act rapidly before the moneys held in safe havens disappear. All moneys held by Indian citizens and corporates in all foreign accounts in excess of $10 million and which have not been permitted under the laws of the land should be declared as nationalized under Benami Transactions Prohibition Act 1988. The onus of proof on the legitimacy of the holdings should be on the owners of the accounts. The 1988 Act gives the authority to recover property held benami.

Here is a fact file on the tax havens and illegal monies looted from Hindusthan and stashed away illegally outside Hindusthan. The perpetrators of the fraud and cognizable offence should be awarded exemplary punishment under the laws of the land.

It is election time, now. It is also time for the nationalist parties to resolve through their manifestos that these monies will be repatriated back to Hindusthan.

Indians holding Swiss bank accounts – a report flashed by a CPI-M MP in the Lok Sabha, is only a tip of the iceberg. There are other tax havens such as Cayman Island. There are also avenues opened up by the ex FM to allow for hawala transactions by resident Indians to transfer moneys for investment through participatory notes from Mauritius. Mauritius acts as a tax haven for the stock market operatives – particularly FIIs who play havoc with the Sensex and Rupee exchange rate to rake in profits and remit them back home. For the hawala transactors of India, other tax havens also provide parking space for the ill-gotten wealth through p-note trades which are transferable notes and which do not require the normal banking regulations for disclosure of ownership.

Since 1992, when FIIs were allowed to invest in Indian equity markets after the balance of payments crisis, an offshore market for PNs developed as a primary conduit for foreign investors to invest in India.

The origins of such flows stems from the bilateral tax treaty that India has had with Mauritius. The main provision of the 1983 treaty was that no resident of Mauritius would be taxed in India on capital gains arising from the sale of securities in India. The treaty therefore gave capital gains exemption for investments routed via Mauritius.

What was originally stated to be for FIIs has been extended to resident Indians by a bizarre SEBI Tribunal order, with the FM not demurring. http://www.moneyvidya.com/blog/imf-working-paper-use-of-participatory-notes-in-indian-equity-markets-and-recent-regulatory-changes-prepared-by-manmohan-singh/

Comment: Assessing Obama's tax haven crackdown

Thu, 05 Mar 2009

Hedge fund managers will inevitably be keeping a close eye on developments as Barack Obama's administration pledges support for legislation introduced on Monday in the US Congress to crack down on tax havens - the revival of a bill that Obama himself co-sponsored while a senator. The bill includes a provisional blacklist of 34 countries, including Switzerland, Jersey and Liechtenstein.

The putative Stop Tax Haven Abuse Act was introduced in the Senate this time by Republican Carl Levin, and in the House of Representatives by Democrat Lloyd Doggett. Treasury Secretary Timothy Geithner welcomed the measure, saying: 'We fully support the legislation on offshore tax centres, and we look forward to working with you as part of the broader effort to address international tax evasion and close the tax gap.'

EU Commission president José Manuel Barroso also said yesterday that the European Union could penalise any nation that refused to share information on tax evasion and money laundering as part of a wider push to tighten financial supervision.

French finance minister Christine Lagarde and her German counterpart Peer Steinbrück have already promised action against any financial centre that does not co-operate in the fight against tax fraud and money laundering, and UK prime minister Gordon Brown has also made noises about clamping down on tax haven abuse.

Of course, there's a huge amount of wilful ignorance - and hypocrisy - involved in the planned clampdown on the offshore financial industry. All the major financial centre, from the Channel Islands to the Caribbean, have implemented the anti-money laundering recommendations of the Financial Action Task Force, and many of them have signed tax information exchange agreements with the US and European countries. The Isle of Man has just concluded one with Germany.

Jurisdictions such as the Cayman Islands note that they have enforced measures such as retrospective due diligence on all banking customers that the US and UK rejected as too difficult and costly. And offshore professionals say that if more transparency is required, a good place to start would be among the vast number of opaque financial structures in Delaware, one of a number of US states that attract global business by in effect operating their own 'offshore' regimes.

However, hedge fund managers will be watching out for any possible impact the campaign might have upon Cayman, the British Virgin Islands, Bermuda, Jersey and Guernsey, the principal domiciles for offshore funds.

And although some of its European neighbours are targeting its own banking secrecy regime, Luxembourg is already rolling out the red carpet to any fund managers that might prefer the reassurance of an onshore jurisdiction within the EU. Time will tell whether the latest media-whipped storm will this time do serious damage to the offshore financial industry, or whether it will blow itself out like so many campaigns in the past.

http://www.hedgeweek.com/articles/print_page.jsp?content_id=296761

Tax Havens Cost U.K. Treasury 4 Billion Pounds a Year, TUC Says

By Reed V. Landberg

March 1 (Bloomberg) -- Tax evasion through countries including Switzerland and Jersey costs the U.K. Treasury at least 4 billion pounds ($5.6 billion) a year in revenue, a union group estimated.

Tax withheld by 15 countries shows that the amount not being paid to the Treasury would fund programs to eliminate child poverty and to help jobless workers cope with the recession, the Trades Union Congress’s said.

The estimate adds to pressure on Prime Minister Gordon Brown to act as leaders of the Group of 20 nations meeting in London next month prepare to debate ways to tighten the tax net.

“With the tax take falling because of the recession, there can be no better time to get tough with the super rich, so many of whom did so much to throw the world into recession,” Brendan Barber, general secretary of the TUC, said in an e-mailed statement today.

His comments also step up the outcry against the banking industry after the U.K. government pledged hundreds of billions of pounds of support for institutions including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc.

Lawmakers and union groups have urged Brown to rein in the offshore asset management businesses of the banks partly owned by the government. Brown, who hosts a G-20 summit on April 2, is attempting a crackdown on tax havens in the U.K., and a Treasury review into Britain’s relationship with Jersey, the Isle of Man and Guernsey is due around the time of the government budget on April 22.

Iceland Concern

Concern about tax havens is rising on the U.K. political agenda after Chancellor of the Exchequer Alistair Darling loaned the government of Iceland $1.3 billion to repay British depositors who lost money when banks in Reykjavik collapsed. Iceland isn’t a tax haven.

Richard Murphy, a tax consultant employed by the TUC, generated his estimates using tax data supplied to the government’s Revenue & Customs department and made public to Parliament.

Banks in countries the TUC names as tax havens, which also include Belgium, Austria and Luxembourg because they don’t share data with the U.K., withhold 15 percent of the interest they pay to customers and remit a portion of that to the U.K. government.

“People who ask for tax to be withheld have no intention of declaring the income received to the U.K.,” the TUC said in a statement. “If they had intention of doing that, they would be better off opting for information exchange.”

The TUC represents 6.5 million workers in 59 unions across the U.K. Brown’s ruling Labour Party gets about two-thirds of its annual funding from unions.

The TUC’s tax haven list also includes the British Virgin Islands, Gibraltar, Guernsey, Jersey, Netherlands Antilles, Turks & Caicos Islands, Andorra, Monaco and San Marino.

For Related News and Information:

To contact the reporter on this story: Reed Landberg in London at landberg@bloomberg.net.

Last Updated: March 1, 2009 01:00 EST

http://www.bloomberg.com/apps/news?pid=20601085&sid=aHbGdDXMEI7Q&refer=europe#

Ex-dictator’s heirs may not get cash (Atlanta Journal Constitution, Feb. 12, 2009)

The Swiss government is ready to release $6 million seized from bank accounts linked to former Haitian dictator Jean-Claude “Baby Doc” Duvalier —- but not back to his family. The Duvalier family failed to prove the money was of legitimate origin and therefore is not entitled to the assets, the Federal Office of Justice said Thursday. The family has 30 days to appeal, or the Swiss Foreign Ministry will select aid organizations in Haiti to receive the money.

http://www.ajc.com/services/content/printedition/2009/02/13/world0213.html#

So long, farewell, auf wiedersehen: is it game over for Swiss banks

Once it was a place where the world's wealthy safely hid their trillions, but now international pressure, including a US lawsuit against troubled industry giant UBS, may force Switzerland's bankers to give up their long-cherished secrecy

Treasure, in fairytales, is stored underground and guarded by gnomes. The gnomes of Zurich have over the years performed heroically. They have succeeded in protecting from the world's tax authorities nearly a third of the world's $7 trillion of privately held wealth.

But against their will, Swiss bankers are being dragged from subterranean vaults into the light. The fairytale that has delivered a standard of living envied by the rest of the world is slipping away. And the country's power brokers know it.

Last Tuesday, on the day Switzerland's biggest bank, UBS, saw its share price sink to an all-time low, the country's president, Hans-Rudolf Merz, himself a former UBS banker, suggested for the first time that bank secrecy - his country's most precious commodity - is no longer non-negotiable.

A historic moment, it was followed a day later by the sudden resignation of the chief executive of UBS, once its richest institution. The departure of Marcel Rohner, who lasted just 20 tempestuous months, is yet another calamitous milestone in the collapse of what is arguably Europe's most powerful bank.

For Switzerland, these are dark days. Private banker to the world, the country - and in particular its shadowy financial elite - has suffered a wave of unprecedented humiliations.

No European bank has suffered bigger write-downs than UBS. Its reputation for risk-free sobriety in shreds, UBS has dumped $40bn worth of toxic sub-prime mortgages and CDOs into a "bad bank" and required a $3bn government bail-out. It has even been forced to order bankers to hand back bonuses after the traditionally phlegmatic Swiss public reacted with fury when it realised UBS was doling out $2bn to loss-making money-men.

Even more damagingly, UBS is embroiled in a multi-million-dollar tax evasion scandal in the United States that has led to the bank being sued by the US Department of Justice, which is demanding the identities and details of 52,000 of its American account holders. The future of Swiss banking hangs on this case.

Two weeks ago, UBS paid a $788m fine and handed details of 250 private accounts to US investigators after court documents revealed that UBS wealth managers smuggled diamonds in toothpaste tubes, deliberately destroyed offshore bank records on behalf of clients and assisted wealthy Americans to conceal ownership of their assets by creating "sham" offshore trusts. Misleading and false documentation was routinely prepared to facilitate this.

The motivation, according to a former senior UBS executive who last year entered into a plea bargain to reduce his sentence, was to ensure the bank managed a staggering $20bn of assets owned by wealthy US individuals, which generated the bank $200m in fees each year. The scandal has seen a huge outflow of funds from UBS since it broke last summer and sparked a wave of litigation against the bank from wealthy clients furious at having their identities revealed.

Switzerland is now an international whipping boy. This year it suffered the indignity of being refused an invitation to the international G20 conference to be held in London in April to discuss reforms to the global financial system - despite a plea by president Merz, who doubles as his country's finance minister, to Gordon Brown at the World Economic (WEF) meeting in the Swiss ski resort of Davos at the end of January. For the world's seventh largest financial centre, the snub is more than an embarrassment. It means the country has become neutered, unable to influence events that could shape globalisation for decades to come.

The problems have led the country's justice minister, Eveline Widmer-Schlumpf, to fly to Washington next week to talk to her American counterpart in a desperate bid to resolve the escalating legal dispute between the two countries.

The mainstream Swiss business community is praying for a breakthrough. Switzerland has also spawned some of the world's biggest non-banking corporations, including food giant Nestlé; Roche, the pharmaceuticals firm; and Glencore, one of the world's most powerful mining companies.

Mindful of the harmful ramifications of the tax scandal, leading executives appear to be backing a form of financial glasnost to counter the threat of being isolated on the world stage. Johann Schneider-Ammann, a board member with many of Switzerland's leading firms, an industrialist and an influential political figure, said last week that tax evasion should be treated as a crime. In Switzerland, this is a revolutionary statement. What makes it unique as a major European country is its distinction between tax evasion, which is legal, and tax fraud, which is not. To make matters harder for international revenue investigators, the Swiss will only co-operate with tax officials if the issue they are pursuing is also a crime in Switzerland. It is a situation that helps the world's richest individuals hide trillions of dollars.

And despite growing international pressure for it to lift the veil of secrecy, powerful conservative forces are massing, determined to stand up to what they argue is hypocritical bullying by the international community.

When earlier this month Brown and Alistair Darling both attacked Swiss secrecy, its bankers were beside themselves with rage. They argue that the UK is at the forefront of aggressive tax evasion through a nexus that connects the City of London with the Channel Islands, the Isle of Man and the Caribbean.

But a senior UK figure working for a Swiss bank said while London bankers are adept at hiding cash from the tax man, Switzerland's role is also crucial: "Swiss and other banks use the same methods in London as they did in the US, including offshore entities in the British Virgin isles et al, indirect telecommunications, credit card accounts linked to the Swiss account, utility bills sent to the bank for payment, even account officers collecting cash from Switzerland."

It is one thing contending with the ire of Britain, France and Germany. But the Swiss have to deal with an increasingly hostile US administration. US officials are infuriated at what they see as obstruction from the Swiss who, they believe, do not have a leg to stand on. President Barack Obama's officials are acutely aware of how leading figures in the Swiss government backed his presidential opponent, John McCain, last year.

The country that helped finance Hitler's rise to power, hid gold looted from Holocaust victims and protected the illicit fortunes of some of the world's most corrupt rulers will not go down without a fight. Right-wing parties have started collecting 100,000 signatures to trigger a referendum to enshrine bank secrecy in Switzerland's constitution.

But the decline in Switzerland's fortunes is largely tied to the collapse of UBS: if the bank was not so weak, the country's financial community believes they would have more chance of resisting international pressure. The anger among UBS bankers towards board members who not only sanctioned huge investment in sub-prime assets at the top of the market, but failed to stop its wealth management arm breaking US law - despite being so advised by its staff - is palpable. "The board were a third-rate Swiss old boys' network," says a senior UBS figure in London. "They are far too distant. They deserve to be shot."

That opinion is shared by the Swiss media and most of the public. Last month, the Zurich headquarters of UBS was attacked by furious protesters, who splattered its imposing whitewashed stone walls with paint. The Swiss media has, unusually, lambasted its financial elite, helping to force UBS bankers to hand back a portion of their windfall.

Bankers are unused to derision. And it shows. Shrunken and nervous, Rohner's last public act as UBS chief executive last Tuesday was to tell viewers on Swiss television talk show Club that the bank would not give an inch on secrecy. "To disclose and divulge bank data: this is a conception of the world that I do not share," Rohner said. The next day, he lost his job.

A UBS spokesman this weekend said that with the appointment of Oswald Grübel - seen as the man who rescued Credit Suisse after it was laid low by its part in the dotcom flotation scandal - as the new chief executive, the bank was now fighting back. "UBS is going through change," he said. "We are addressing and solving problems. The problems led to outflows. That's quite clear: it's not just a flight of clients. Clients are deleveraging.

"But we are paying back debt. We are on the way. We think we will be profitable in 2009. We are rebuilding trust. We have clearly acknowledged fraud. We took responsibility. It's part of our deferred prosecution that we will overhaul our compliance and control framework. Also in our offshore overseas operations, this is something we are working on."

Grübel is seen as UBS's last hope of survival. But those close to the bank say it has suffered such huge shocks that another blow could be fatal. The risk of corporate loan defaults and its exposure to international credit markets during a recession are cited as major risk factors.

Swiss insiders suggest it will offer to pay a proportion of tax on its wealthy clients so long as it can protect their identities. But the future of Switzerland lies in Obama's hands. He has promised a crackdown on tax havens. If he convinces fellow world leaders at the G20 that bank secrecy cannot be tolerated at a time when the world needs every penny to haul itself out of the mire, then Switzerland will be done for. This was not the way the fairytale was meant to end.

The secret history

The secrecy of Swiss banks dates back to the middle ages and was used to hide wealth by many of Europe's dynasties and the Vatican, even though Switzerland had embraced Protestantism.

Secrecy became official Swiss government policy during the First World war and was made law in 1934.

Swiss financiers have faced criticism for destabilising democracy during the last 100 years. In 1923, Adolf Hitler visited Zürich to raise money for his party, and was said to have met bankers at the famous Hotel St Gotthard.

Swiss banks were used by the Nazis to stash looted gold. A UBS security guard blew the whistle on the bank's attempts to destroy records dating back to that time; he was sacked for his trouble. In 1998, an independent panel of experts found Swiss banks were guilty of accepting Nazi deposits, even though they knew those deposits involved theft.

Up to 19 Swiss banks, including Credit Suisse, were used by corrupt former Nigerian ruler Sani Abacha, who looted £3bn from his country. But the Swiss Bankers' Association points out that its report revealed the banks' identities, which is more than British regulators managed in the Abacha case.

http://www.guardian.co.uk/business/2009/mar/01/swiss-banks-anonymity-ubs/print

 

March 4, 2009

For Swiss Banks, an Uncomfortable Spotlight

By NELSON D. SCHWARTZ

ZURICH — Banking has long been to this tidy city what cars are to Detroit and computers to Silicon Valley, only more reliably. For while fortunes swung wildly in those places, quietly serving the world’s wealthy made growth here as predictable as a fine Swiss watch.

Until now.

With Switzerland’s biggest bank, UBS, staggering beneath a tax scandal that has undermined this country’s vaunted banking secrecy — as well as $53 billion in write-downs on American subprime securities — not only is Switzerland’s reputation for stability threatened but so is the industry that made it one of the world’s wealthiest countries.

“There is a sense that this is a very, very dangerous situation because the banking sector has been crucial to Switzerland’s well-being,” said Charles Wyplosz, director of the International Center for Money and Banking Studies in Geneva. “If it were to shrink, there is no doubt it would have serious consequences for our standard of living.”

Stability will not return soon. Last week, UBS replaced its chief executive, Marcel Rohner, after only 20 months in the job, choosing the former leader of its archrival, Credit Suisse, Oswald Grübel, to take his place. Pressure is building on Peter Kurer, the chairman of UBS, to step down. In the close-knit world of Swiss banking, speculation is rife that Mr. Kurer, who served in top management roles during both the tax and subprime debacles, could be out within days.

Britain and the United States have spent hundreds of billions shoring up their banks, but Switzerland’s resources are considerably more limited. At roughly $2 trillion, the balance sheet of UBS is four times as large as Switzerland’s gross domestic product.

Over all, Swiss bank assets equal 6.8 times gross domestic product, less worrisome than Ireland’s 9.5 multiple, but still far more than in the United States, where commercial bank assets stand at 70 percent of G.D.P.

What’s more, this alpine wealth haven is set to get another blast of unwelcome attention Wednesday when a Senate panel examines how UBS helped American taxpayers evade the reach of the Internal Revenue Service.

“These abuses have been going on for much too long,” said Senator Carl Levin, Democrat of Michigan, who will lead the hearing and is sponsoring legislation that would crack down on offshore accounts.

Last month, UBS paid a $780 million fine and turned over roughly 250 client names, avoiding a criminal indictment but igniting outrage in a country where bank secrecy — or bank privacy, as the Swiss prefer to call it — is practically an article of faith.

The numbered, virtually anonymous Swiss bank account is the stuff of movie legend and popular lore.

But here it is a bread and butter issue — Switzerland’s financial services sector contributes 12.5 percent of the country’s gross domestic product. That compares to 5 percent from financial services in the countries that use the euro and about 8.5 percent in the United States.

In Zurich, while politicians sputter about how Switzerland is being unfairly singled out and point fingers at British tax havens in the Caribbean and the Channel Islands, UBS executives have a more basic worry: client money is pouring out of the bank’s coffers.

In 2008, clients pulled 123 billion Swiss francs, or $105 billion, out of UBS’s global wealth management business, equal to nearly 8 percent of assets under management. That outflow, along with the drop in value of investments like stocks and bonds in 2008, lowered UBS’s total private assets under management to $1.4 trillion by the end of 2008, from nearly $2 trillion at the end of 2007.

“The main reason was bad publicity and the mistakes we made, not only in trading but in wealth management,” said Mr. Grübel, the new chief executive. “It created uncertainty and mistrust with clients and led to an outflow.”

He admitted that restoring clients’ confidence would not happen overnight. “From my experience it takes up to 12 months for outflows to reverse,” he said.

Referring to the United States tax case, Mr. Grübel added, “We should never have gotten into it, and we should never do something like that in the future.”

UBS shares closed at $8.35 in New York on Tuesday, down from a high of $35.36 last April.

For Switzerland over all, as for UBS, it has been an abrupt fall.

From 2004 to 2007, the Swiss economy grew by nearly 3 percent annually, but in the final quarter of 2008, the economy shrank by 0.6 percent, according to data released Tuesday.

That might not sound like much compared with the 6.2 percent contraction that hit the American economy during the same period, but the possibility of a steeper decline in 2009 is alarming to citizens long sheltered from issues like war and economic instability.

“A 2 or 3 percent contraction is quite exceptional for Switzerland,” said Pirmin Bischof, a member of the Swiss Parliament from the center-right Christian Democratic party.

Mr. Bischof, who studied at Harvard Law School and considers himself an admirer of the United States, said that for ordinary Swiss voters, the biggest issue after the economy was the fate of bank secrecy and Washington’s effort to force UBS to hand over more names.

“It’s a double standard,” he said. “What’s going on now is very difficult to understand.”

For UBS, the fallout from the tax case as well as the boardroom turmoil could not have come at a worse time. Just last fall, the Swiss National Bank agreed to buy $39.1 billion in so-called toxic assets, removing them from UBS’s balance sheet and providing UBS with a $6 billion injection of cash.

And by the beginning of 2009, it seemed as if things were beginning to stabilize, said Urs P. Roth, chief executive of the Swiss Bankers Association. “It was in a turnaround and right at that moment, the Department of Justice decided to force UBS to deliver the information,” Mr. Roth said.

Over the long term, Mr. Roth said Switzerland would retain its position as a global wealth haven despite the pressure to provide more names to American authorities, and competition from even less regulated locales like the Cayman Islands and the Channel Islands.

“Bad cases are always a blow to reputations,” he said. “But we are quite confident that the reputation can be maintained and built up again.”

http://www.nytimes.com/2009/03/04/business/worldbusiness/04swiss.html?_r=1&pagewanted=print

 

March 4, 2009

Pressure Grows on UBS Before Senate Hearing

By BERNIE BECKER and LYNNLEY BROWNING

Documents released Tuesday provide new evidence that the Swiss bank UBS sought ways to circumvent Internal Revenue Service rules to help wealthy Americans set up secret offshore entities and insurance plans to evade taxes on billions of dollars in assets.

According to the documents released by a Senate panel, UBS ignored warnings from the top-tier law firm Baker & McKenzie shortly after it had joined an I.R.S. program in 2000. The program was intended to allow foreign banks to attract investors into United States securities without disclosing their names to the agency.

The memo puts renewed pressure on UBS, whose chief financial officer of global wealth management and business banking, Mark Branson, is scheduled to testify on Wednesday before the Senate Permanent Subcommittee on Investigations.

The law firm told UBS officials that the offshore entities — including ones in Liechtenstein — and insurance plans would violate UBS’s commitment under the I.R.S. program, known as Qualified Intermediary, to file certain tax forms with the I.R.S.

The memo, sent to UBS’s business committee of private banking, described a way to get around the legal advice from the law firm: “We have been advised by Baker & McKenzie that we cannot recommend products (such as the use of offshore companies, annuity or insurance products) to our clients as an ‘alternative’ to filing a Form W-9. This could be viewed as actively helping our clients to evade U.S. tax, which is a U.S. criminal offense.”

The memo went on to say that UBS considered the offshore companies — along with grantor and other trusts, certain foundations, and certain insurance products in which a foreign insurance company holds the assets underlying a deferred variable annuity policy or a life insurance policy — to be exempt from the I.R.S. program.

The use of offshore companies to mask trusts and foundations, the memo said, was “ a relatively minor structural change, which could be made without upsetting the I.R.S. if done prior to 2001.” The memo was signed by Jonathan Bourne and Rene Sonneveld, who were in UBS’s financial planning and wealth management unit.

UBS, the world’s largest private bank, joined the I.R.S. program in early 2000; the rules would have been in effect in January 2001.

The disclosure of the internal memorandum is a new blow to UBS, which is under pressure by federal authorities to divulge the names of tens of thousands of well-heeled American clients suspected of tax evasion.

The effort is drawing sharp criticism from the Swiss, who say disclosing the names would violate Swiss law.

Under the I.R.S. program, foreign banks promise to withhold any taxes due on United States securities in accounts of American clients and send that money to the I.R.S.

Federal prosecutors accuse UBS of hiding American clients behind shadowy offshore entities to make them look like foreigners who did not owe the taxes.

UBS averted an indictment two weeks ago by reaching a $780 million deferred-prosecution agreement to settle accusations that it used undisclosed offshore private banking services to help wealthy Americans evade taxes.

Switzerland is the world’s largest offshore tax haven, with trillions of dollars in assets. And UBS is digging in its heels on the federal efforts to force it to disclose names.

Karina Byrne, a UBS spokeswoman, said Tuesday that regarding the broader summons for clients’ names, “we believe we’ve complied with the summons to the fullest extent possible without violating Swiss law, and we believe that the John Doe summons is fundamentally a dispute between the I.R.S. and the Swiss government” that should be resolved through diplomacy.

A spokeswoman for Baker & McKenzie said that the law firm did not discuss current or former clients.

http://www.nytimes.com/2009/03/04/business/04tax.html?ref=worldbusiness&pagewanted=print

 

February 19, 2009

A Swiss Bank Is Set to Open Its Secret Files

By LYNNLEY BROWNING

In the hush-hush world of Swiss banking, the unthinkable is happening: secrets are spilling into the open.

UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes. The bank admitted conspiring to defraud the Internal Revenue Service and agreed to pay $780 million to settle a sweeping federal investigation into its activities.

It is unclear how many of its clients’ names UBS will divulge. Federal prosecutors have been examining about 19,000 accounts at the bank, but UBS ultimately may disclose the identities of only a few hundred customers.

But to some, turning over any names at all heralds the end of the secret Swiss bank account, whose traditions date to the Middle Ages.

“The Swiss are saying that this is the end of Swiss banking as they knew it,” said Jack Blum, an offshore tax specialist. “Nobody will trust the security of the Swiss bank account.”

As part of the settlement, UBS agreed to cooperate with a broad summons issued by the Justice Department to turn over the names. Under the terms of a so-called deferred prosecution agreement, the bank and its executives could be indicted if UBS didn’t identify the customers.

UBS has said it is closing the offshore accounts of its American clients. But under the deal with the United States authorities, the bank must provide periodic written evidence of that to prosecutors. UBS earned $200 million annually from the business.

Prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes.

In a striking admission, UBS said that from 2000 through 2007, some of its private bankers and managers had “participated in a scheme to defraud the United States” and the I.R.S. by helping American clients set up and conceal offshore accounts. The scheme involved falsifying or not properly obtaining or filing certain tax forms required of both the bank and its clients.

UBS’s offshore private banking business once employed some 60 private bankers in Lugano, Zurich and Geneva. Prosecutors claimed UBS referred clients to lawyers and accountants who set up secret offshore entities to conceal assets from the I.R.S.

UBS urged some American clients to destroy records and to stash watches, jewelry and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the I.R.S. could not track purchases. In a statement on Wednesday, Peter Kurer, the chairman of UBS, said that “UBS sincerely regrets the compliance failures in its U.S. cross-border business that have been identified by the various government investigations in Switzerland and the U.S., as well as our own internal review. We accept full responsibility for these improper activities.”

Marcel Rohner, the group chief executive of UBS, said in a statement that “it is apparent that as an organization we made mistakes and that our control systems were inadequate.”

In January a senior UBS executive, Raoul Weil, was declared a fugitive, two months after being indicted by a federal judge in connection with the investigation of the bank. Mr. Weil, a Swiss citizen, oversaw the cross-border private banking operations from 2002 to 2007.

UBS had fiercely resisted turning over the names, even after some executives were indicted and implicated in the offshore private banking business. Swiss law distinguishes broadly between tax avoidance, tax evasion and tax fraud. Unlike in the United States, tax evasion is not a criminal offense under Swiss law.

The move by UBS to settle the case, on the eve of a Senate subcommittee hearing next Tuesday on the matter, signals how close the bank came to being indicted for not cooperating with prosecutors. Indictment is a near-certain death knell for corporations.

Of the $780 million that UBS will pay, $380 million represents disgorgement of profits from its cross-border business. The remainder represents United States taxes that UBS failed to withhold on the accounts. The figures include interest, penalties and restitution for unpaid taxes

As part of the deal, UBS also entered into a consent order with the Securities and Exchange Commission in which it agreed to charges of having acted as an unregistered broker-dealer and investment adviser for Americans.

The settlement caps a painful run for UBS, which suffered more than $50 billion in losses in the collapse of the American mortgage market and received a $60 billion bailout from the Swiss government last October.

The bank will not have to pay additional fines and penalties, which could have brought the deal to more than $1 billion. People briefed on the issue said the banking crisis and the recession were factors in this decision by prosecutors.

http://www.nytimes.com/2009/02/19/business/worldbusiness/19ubs.html?fta=y&pagewanted=print

 

FOR IMMEDIATE RELEASE
Wednesday, February 18, 2009
WWW.USDOJ.GOV

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UBS Enters into Deferred Prosecution Agreement

Bank Admits to Helping U.S. Taxpayers Hide Accounts from IRS; Agrees to Identify Customers & Pay $780 Million

WASHINGTON – UBS AG, Switzerland’s largest bank, has entered into a deferred prosecution agreement on charges of conspiring to defraud the United States by impeding the Internal Revenue Service (IRS), the Justice Department announced today.

As part of the deferred prosecution agreement and in an unprecedented move, UBS, based on an order by the Swiss Financial Markets Supervisory Authority (FINMA), has agreed to immediately provide the United States government with the identities of, and account information for, certain United States customers of UBS’s cross-border business. Under the deferred prosecution agreement, UBS has also agreed to expeditiously exit the business of providing banking services to United States clients with undeclared accounts. As part of the deferred prosecution agreement, UBS has further agreed to pay $780 million in fines, penalties, interest and restitution. Earlier today, the agreement was accepted in Ft. Lauderdale, Fla. by U.S. District Judge James I. Cohn.

A criminal information was unsealed today that charges UBS with conspiring to defraud the United States by impeding the IRS. According to court documents, in 2000, after it purchased the brokerage firm Paine Webber, UBS voluntarily entered into an agreement with the IRS that required UBS to report to the IRS income and other identifying information for its United States clients who held United States securities in a UBS account. Court documents allege that the agreement also required UBS to withhold income taxes from United States clients who directed investment activities in foreign securities from the United States. The information further asserts that, in order to evade those new reporting requirements, employees and managers within the cross-border business, with the knowledge of certain UBS executives, helped United States taxpayers open new UBS accounts in the names of nominees and/or sham entities. According to court documents, the assets of the individual’s accounts were then transferred to the newly created accounts, as to which the U.S. taxpayer would not be identified as a beneficiary.

The information asserts that this device was used by UBS to justify evading its reporting obligations and helped United States taxpayers to continue to conceal their identities and assets from the IRS.

The information also alleges that Swiss bankers routinely traveled to the United States to market Swiss bank secrecy to United States clients interested in attempting to evade United States income taxes. Court documents assert that, in 2004 alone, Swiss bankers allegedly traveled to the United States approximately 3,800 times to discuss their clients’ Swiss bank accounts. The information further alleges that UBS managers and employees used encrypted laptops and other counter-surveillance techniques to help prevent the detection of their marketing efforts and the identities and offshore assets of their U.S. clients. According to the information, clients of the cross-border business in turn filed false tax returns which omitted the income earned on their Swiss bank accounts and failed to disclose the existence of those accounts to the IRS.

In light of the bank’s willingness to acknowledge responsibility for its actions and omissions, its cooperation and remedial actions to date, and its promised continuing cooperation and remedial actions, the government will recommend dismissal of the charge, provided the bank fully carries out its obligations under the agreement.

In November 2008, UBS executive Raoul Weil was indicted by a federal grand jury in Fort Lauderdale and charged with conspiring to defraud the United States for his alleged role in overseeing the United States cross-border business. The district court recently declared him to be a fugitive.

In June 2008, former UBS private banker Bradley Birkenfeld pleaded guilty to a charge of conspiring to defraud the United States for similar conduct. Birkenfeld is scheduled to be sentenced on May 1, 2009. Also, in June 2008, the U.S. District Court in Miami authorized the Internal Revenue Service to serve upon UBS a so-called "John Doe" summons seeking records that would identify United States taxpayers with accounts at UBS in Switzerland who have elected to conceal the existence of their accounts from the IRS.

"Today’s agreement is but one milestone in an ongoing law enforcement effort to reassure hard-working and law-abiding taxpayers who pay their fair share of taxes that those who don’t will pay a heavy price," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division. "The veil of secrecy has been pulled aside and we will continue to aggressively pursue those who shirk their federal tax obligations or assist others in doing so."

"UBS executives knew that UBS’s cross-border business violated the law," said R. Alexander Acosta, U.S. Attorney for the Southern District of Florida. "They refused to stop this activity, however, and in fact instructed their bankers to grow the business. The reason was money -- the business was too profitable to give up. This was not a mere compliance oversight, but rather a knowing crime motivated by greed and disrespect of the law."

Acting Assistant Attorney General DiCicco and U.S. Attorney Acosta commended Tax Division attorneys Kevin Downing and Michael Ben’Ary, and Assistant U.S. Attorney Jeffrey Neiman, along with special agents from the Internal Revenue Service who provided invaluable assistance in investigating this case.

More information about the Justice Department’s Tax Division and its enforcement efforts is available at http://www.usdoj.gov/tax/.

http://www.usdoj.gov/opa/pr/2009/February/09-tax-136.html

 

Sitaram Yechury

February 25, 2009

First Published: 21:38 IST(25/2/2009)

Last Updated: 22:36 IST(25/2/2009)

From the arc lights to reality

The euphoria around Slumdog Millionaire’s signature song — Jai ho— has transcended the song’s crescendo. Two Indians, from the ‘minority’ community, have won the Academy Awards this year for their contributions in the film; this reflects the country’s rich composite culture — the palimpsest we discussed last fortnight. It was exhilarating to hear Resul Pookutty invoking omkara and shivratri while dedicating the award to the nation. However, it is unfortunate that such Indian talents are recognised only when they appear under western banners. Personally, I rate A R Rahman and Gulzar’s contributions to Indian movies as much more important. Nevertheless, recognition at the world stage is always welcome.

However, we should also look at the reality. The National Family Health Survey-3 says that 56 per cent of our children don’t get any protective vaccination, 40 per cent are underweight and 70 per cent are anaemic thanks to malnutrition. A thousand children die every day due to diseases, which are preventable. Two-thirds of pregnant women in the country are anaemic. This is the reality of the present and future of India and the situation will worsen because the global recession is bound to render lakhs jobless.

The celebration of the fact that Indian talent has been recognised must be accompanied by the determination to improve these shortcomings. This can only be done by enlarging public expenditure to generate jobs and improve our inadequate social and economic infrastructure.

Instead of doing this, the UPA is preoccupied with bailout packages. These packages will only improve company balancesheets but not the purchasing power of the people, which is necessary to kickstart the economy. Already 71 gem polishers in Surat have committed suicide and the textile workers in Namakkal, Tamil Nadu, are selling their kidneys to stay afloat.

The government’s fiscal stimulus is not enough to meet this challenge. In net terms, the interim budget expects an extra capital expenditure of around Rs 40,000 crore, which is less than one per cent of our GDP and a meagre $8 billion, when neighbouring China has announced a package of $586 billion.

Unfortunately, whenever there’s a demand for increased public investments, there are many who wonder where the resources would come from. It is impossible to beat recession without the government incurring huge deficits. That was what the ‘new deal’ was all about.

In April 2007, Prime Minister Manmohan Singh suggested that the rise in the number of Indian billionaires is due to State patronage. He asked: “Are we encouraging crony capitalism? Are we doing enough to protect consumers and small businesses from the consequences of crony capitalism?” Crony capitalism refers to a situation in which big business prospers thanks to its close relationship with the State, instead of its success being determined by free market. The various scams that have surfaced on the allocation of land for the Special Economic Zones, the mega spectrum telecom scam, the Satyam fraud and the subsequent exposes of such scams connected with family members of the Andhra Pradesh Chief Minister — all testify this.

As a result of such an accumulation of ill-gotten wealth, there has been an outflow of capital from India. The Global Financial Integrity Report, 2009, says that illegal financial outflows from the developing countries have been growing at a compound rate of 18.2 per cent annually in this decade. How much of this is from India? Surely, this must be unearthed. The Swiss Bankers Association (SBA) Report, 2006, says India tops the list with $1.4 trillion (Rs 70 lakh crore) deposits in their banks. The veracity of this wealth must be checked and its return must be ensured. There are some 70 other tax havens in the world. How much more of the ill-gotten wealth is lying in these places?

Despite the confidentiality practised by Swiss Banks, the SBA website informs that it is the duty of banks to provide information under certain circumstances, which include money laundering and tax fraud.

The US Justice Department had obtained information about US citizens who held undeclared accounts in the largest Swiss Bank — UBS. Even though there was a hue and cry about the fact that the centuries-old code of secrecy of the Swiss Banks was being breached, the US authorities succeeded in their endeavour. If the US could do this, so must India. For us, it is not merely a question of tax evasion or fraud; the the issue is much bigger when Indian law does not permit holding of such huge assets abroad.

Crony capitalism can be combated only when this unaccounted money is brought back. Only then resources to sustain a quantum leap in public investment can be met more adequately and the lives of our children can be improved substantially.

(Sitaram Yechury is CPI(M) Politburo member and MP)

http://www.hindustantimes.com/StoryPage/Print.aspx?Id=d35c8c0f-7a15-4258-9aea-40447d909fc0

 

Swiss finance sector halved if bank secrecy dropped: banker

Feb 24, 2009

GENEVA (AFP) — Switzerland's key financial services industry could be decimated if its trademark secrecy is given up as part of reforms to cope with the global economic crisis, a prominent Swiss private banker warned.

Without banking secrecy, "the financial centre would shrink by up to half of its current size," Ivan Pictet, a private banker who heads the Geneva Financial Centre bank association, told Le Temps daily on Tuesday.

"Rather than making up about 12 percent of gross domestic product, the financial sector would make up just about six or seven," he said when asked what would happen if Switzerland gives up its bank secrecy practices in the face of calls for greater financial system transparency.

Critics say that the system must be made more transparent so that financial risk can be more easily assessed and capital flows more easily monitored, two key failings contributing to the current crisis.

That has put Switzerland on the spot because its banking system has prided itself on offering complete secrecy for clients, which many critics claim means the country has in effect allowed wealthy foreign clients to evade tax.

In Switzerland, tax evasion is not a crime but tax fraud -- which involves the forgery of documents, is.

Swiss banking secrecy law prohibits banks in Switzerland from revealing any information to authorities or any third parties about their clients, except in cases involving recognized criminal investigations.

A Swiss bank would not therefore transmit details in cases of evasion but would do so only in instances of fraud.

Last week, UBS provided data on 250 to 300 clients to the US government and paid a fine of 780 million dollars to settle a case of abetting tax fraud by US clients, in a move seen at the time as easing the threat of change.

A day later, however, the US government filed a separate lawsuit to try to force UBS to disclose the identities of 52,000 US customers who allegedly evaded taxes, putting the issue back firmly in the spotlight.

Fears that the secrecy laws will be changed put Swiss banking stocks under pressure last Thursday, with UBS plunging almost 17 percent at one point.

UBS continued to tumble to historic lows on Tuesday, trading down 4.70 percent to 9.53 Swiss francs in afternoon trade.

Pictet said that Thursday's falls in share values did not represent the expected cost to the industry should banking secrecy be abandoned.

"If (banking secrecy) were to disappear, the client would no longer have any reason to travel 500 kilometres to see his wealth manager," he warned.

But international pressure is mounting, with European leaders preparing for the meeting of the Group of 20 nations in April calling Sunday for a list of "uncooperative jurisdictions" to be drawn up, with sanctions to be imposed.

Pictet said that was a "real threat" and called for Switzerland to "fight for equal treatment as all other financial centres such as Singapore."

He said abolishing banking secrecy could have a "huge" impact on Geneva.

"The 140 or so banks which are in Geneva would no longer have reason to stay, they are here to offer Swiss banking secrecy.

"The traditional Swiss knowledge on wealth management would be insufficient in itself to compensate for the loss of the protection of the private sphere."

Banking secrecy is meant to "protect the private sphere of the client and there is no prosperous financial centre that does not efficiently protect the confidentiality of its clients," he said.

Pictet also rejected the suggestion that Switzerland's financial centre thrives on tax evasion, saying it is "not the role of a banker to assure that his client is paying his taxes.

"That would require a police investigation before determining if the client could be accepted or not," he added.

Copyright © 2009 AFP.

http://www.wealth-bulletin.com/wealth-business/content/1053446100/#

The Black Trillion (Tehelka, 5 March 2009)

The issue of Swiss accounts rocks Parliament — but will any action be taken, asks SHANTANU GUHA RAY


CRICKET MARKETING may have dreamed up the blue billion tag to put a number to the fans of this pan-India passion, but Parliament has been rocked twice in the past two weeks over a rather different figure — a trillion and a half of Indian deposits in Swiss banks.

When Communist Party of India (CPI) Deputy General Secretary Sudhakar Reddy raised the issue of Indian deposits in Swiss banks, his mention of the $1.45 trillion figure and that it was double the country’s gross domestic product shook the Lok Sabha. External Affairs Minister Pranab Mukherjee, currently in charge of the finance portfolio, didn’t take note and left it to his deputy, Pawan Kumar Bansal, to say a probe would be ordered.

http://www.tehelka.com/channels/Business/2009/Mar/07/images/Swiss.jpg

Reddy was quoting a Swiss Banking Association report of 2006-07 that said India led the top five countries in deposits — the others are Russia, the UK, Ukraine and China. “Everyone in the House was rattled,” says Reddy, whose repeated statements in Parliament were a follow-up of the two-page letter he’d written to the Prime Minister after being informed about a relatively unknown NGO.

“If equally distributed, each Indian will get Rs 100,000,” Reddy wrote in his letter, which evoked no response from the Prime Minister’s Office. But, in a late reaction, the Communist Party of India- Marxist (CPM) urged New Delhi to seek details of these deposits.

The point being made by the Left parties is that the famed Swiss banks secrecy is not an absolute. Recently, banking details of eight US clients of Switzerland’s UBS were sent to Washington, despite a late Swiss court order blocking the move. “If the US can do it, nothing prevents the Indian Government from getting the details,” said the CPM Politburo.

A report in The Washington Post says that, in addition to details of the eight clients, names of more than 240 clients have been sent by UBS. The US Justice Department is trying to break through Switzerland's legendary banking secrecy to go after American tax evaders: UBS admitted to the tax fraud and agreed to pay $780 million. However, UBS rejected the demand that it disclose identities of some 52,000 US customers who allegedly evaded taxes. The US tax office argues US citizens are hiding about $14.8 billion in such accounts.

Reddy, Chairman of the Lok Sabha Committee on Labour, has moved a motion slated for discussion on February 27, as part of the Private Members Resolution. “We have to get to the bottom of this case,” Reddy told TEHELKA.

In New Delhi, Swiss Ambassador to India Dominique Dreyer acknowledged the flow of black money from India and other countries into Swiss banks, but said that new legislation in Switzerland could make stashing such money difficult in the future. “The banks themselves monitor the origin stringently," Dreyer said while celebrating 60 years of the Indo-Swiss Friendship Treaty. “Switzerland was accused of giving shelter to black money. It would not be stopped 100 per cent (under the new law) but controlled up to a certain limit.”

But those familiar with Swiss banks say that the chances of New Delhi seeking and obtaining a greater list of names than that sent to Washington seems doomed because of the new court order that arms the European country’s national regulator, FINMA. Swiss newspaper Tribune De Geneve quoted FINMA’s Alain Bischel saying the tribunal’s order forbade the Swiss bank regulator from giving the plaintiffs’ “banking documents to third parties" or risk legal proceedings. Also, Switzerland’s populist Swiss People’s Party (SVP) has called for a Parliament debate, demanding retaliation against the US probe and threats to the prized banking secrecy.

It is estimated that nearly $2.2 trillion, a third of $7 trillion the world's wealthy have spirited into offshore tax havens, is stashed in Swiss banks. India, from where an estimated 80,000 people travel to Switzerland every year, has the largest slice of the secret pie. “There are no orders to probe,” says a senior official of the Enforcement Directorate. Agrees Admiral RH Tahiliani, former naval chief who now leads Transparency International India: “Billions have been parked in Switzerland, with Indians topping the list.”

With those levels of deposits, and Switzerland only one of the popular tax havens in the world (Lichtenstein, the Bahamas and the Cayman Islands also ask no questions), it is barely surprising that the integrity score of India has been 3.4 in 2007-08 (on a scale of 10) as compared to Denmark and Finland scoring a perfect 10. But since the wealth parked in these accounts is possessed both by rich businessmen and rich politicians, the chances that any government will be pushed enough to demand their banking details are slim indeed.

WRITER’S EMAILshantanu@tehelka.com

 

From Tehelka Magazine, Vol 6, Issue 9, Dated Mar 07, 2009

 

http://www.tehelka.com/story_main41.asp?filename=Bu070309the_black.asp

 

 

New UBS CEO sees changes to Swiss banking secrecy

The Associated Press

updated 10:13 a.m. ET Feb. 28, 2009

ZURICH - The new chief executive of UBS AG says Switzerland should consider changing its banking secrecy laws so they no longer protect suspected tax evaders, according to an interview published Saturday.

Oswald Gruebel told twice-weekly newspaper Finanz und Wirtschaft that Switzerland's banking secrecy laws need to be changed in order to ease the political pressure other countries are putting on the small Alpine nation.

Germany, Britain and the United States have demanded that Switzerland open itself up to foreign tax investigations. UBS is currently the subject of a major U.S. probe into whether it conspired to defraud the U.S. government of taxes owed by thousands of American clients.

"It's questionable, whether we can continue to hide tax evaders behind banking secrecy," Gruebel told Finanz und Wirtschaft.

The 66-year-old German, who was apppointed Thursday to lead day-to-day operations at the ailing Swiss banking giant, said banking secrecy could continue if aspects of it were changed.

Under current Swiss law, foreign tax investigators can only receive assistance from Switzerland if a person is suspected of committing outright tax fraud. Where a person merely commits tax evasion — such as by failing to declare the full extent of their assets — Swiss authorities and banks are prevented from handing over client details to protect their privacy.

"Banking secrecy has helped Switzerland a lot," Gruebel told the newspaper. "The financial center has made our country rich."

He added that other countries were using the issue of banking secrecy to attack Switzerland's position as a leading center for wealth management, in order to force billions of dollars back into their own financial centers.

UBS is due to appear before a U.S. Senate committee next week to answer questions about its offshore banking practices.

The bank argues that under Swiss banking secrecy laws it cannot hand over the names of its American clients unless U.S. authorities follow appropriate legal procedures, including providing sufficient evidence that each individual client is suspected of tax fraud. The bank recently handed over the names of 250-300 suspected tax fraudsters to the U.S. embassy in Bern.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

URL: http://www.msnbc.msn.com/id/29276075/

 

 

 

 

 

 

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