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| Tax havens can fall | | | In releasing the interim report of the party’s Task Force on Indian money in tax and secret banking havens, the BJP has done something fairly remarkable. Unlike dramatic, hit-and-run issues that are raised and then forgotten in the midst of election campaigns, the BJP has actually taken the debate forward. It has, to the best of the abilities of private citizens who do not have access to state authority and diplomatic channels, investigated the degree of Indian money that has been taken out of the country. It has pointed out that Western nations are, for their own reasons, demanding transparency from Swiss and other secret-banking authorities and that for this reason the global environment is conducive for India to make similar demands. The bulk of the money that lies in secret and numbered accounts held by Indians represents political and governmental bribes. Some of it comprises corporate embezzlement, which is then re-routed to India in the form of Foreign Direct Investment. An unknown quantum is revenue from drug and organised crime syndicates that intelligence officials fear is being used to shore up terrorist activities. The exact amount lying in such accounts is unknown. A variety of vastly varying figures is available, quoted by credible as well as unreliable sources. Indeed, the Task Force has been honest enough to say it can vouch for the “fact of the loot” but not the “maths of the loot”. That is the task of a Government agency, acting with the full force of India’s diplomatic and sovereign backing. The Task Force report has, however, laid down a road map and suggested that a multi-agency entity needs to be set up to go into the matter. Perhaps a voluntary disclosure scheme could also be tried out, with a flat tax component. That may attract corporate swindlers, but is unlikely to weed out political and criminal account-holders.
The Congress response to the entire business has been disappointing. The Prime Minister discounted Mr LK Advani’s initial suggestion that India raise the matter at the G20 meeting in London. As such, while developed countries took on the secret banks at the London summit, India kept mum. Congress spokespersons then cited newspaper columnists to make technical objections to Mr Advani’s letter to the Prime Minister. They said that the amount of Indian money in the tax/secret banking havens was unknown and subject to wild Internet speculation. This is undoubtedly true. Yet, without a rigorous inquiry can a number be put to the loot? Shouldn’t that be the destination of the investigation rather than its starting point? As a consequence, the ruling party has painted itself into a corner, given the impression that it wants to protect the “black money economy”. Meanwhile the Swiss Ambassador has promised cooperation but confessed the Indian Government has not put down any request for it!
The BJP Task Force report has been drafted by a team comprising, among others, India’s former intelligence chief, an IIM professor of finance and a top corporate lawyer. Some of its suggestions may seem intrusive — such as collecting travel information related to politicians and other high net-worth individuals who travel frequently to Switzerland and other tax havens. However, this is a good beginning to a debate on how to make public life in India transparent and available for justifiable scrutiny. It makes the BJP look serious about governance.
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