Cong not doing enough, deflecting black money issue, says Arun Shourie

Accusing the Congress of trying to deflect the issue of bringing back illegal money stashed in Swiss banks, the BJP on Sunday gave a point-by-point rebuttal to the Congress’ charges against the party on the issue and blamed it for not doing enough despite the emergence of a national consensus on the matter.

Responding to Congress’ charge that BJP prime ministerial candidate LK Advani was taking up the issue on the eve of elections to gain electoral benefit, the BJP said the former Deputy Prime Minister raised the issue in April last year by writing to Prime Minister Manmohan Singh. 

Addressing a media conference here on Sunday, BJP MP and former Union Minister Arun Shourie said, “The reply that the then Finance Minister (P Chidambaram) sent to him (Advani) showed that the Government intended to do little except keep going through the pretence of taking some steps.” 

Shourie further charged the Congress with not doing enough to bring back illegal money from the tax havens and said, “We were alarmed to learn that a senior official of the Finance Ministry had written to the then Indian Ambassador in Germany to not press the Germans for release of the names of Indians in the list that they had obtained from Liechtenstein….lest the Germans take offence and conclude that they were being pressurised and their bona fides were being questioned.”

Adding on to the question of why raising the issue now, he said that a “unique” opportunity had arisen only now, after Western economies found themselves in a severe economic crisis. 

The crisis has forced countries like Germany, France, USA and the UK to take the leadership role in G-20 and pledge to get their stolen wealth back from tax havens. 

“The BJP believes that this is the right time for India to join the global effort to get its own stolen wealth back.”

On the Congress' claim that G-20 meeting was not the proper forum for taking up the issue of illegal money in tax havens, the BJP leader said, if that was not the right forum how come the communiqué issued by the G-20 leaders on April 2 this year 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."

"Can the Government which allowed Ottavio Quattrochhi, the Italian power broker who is the main accused in the Bofors scam, to take his money out of banks after it had been frozen 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 (Quattrochhi) may get away from Argentina be trusted to bring the loot back?'' he said in response to the Congress' latest "cover up" of the issue by disputing the figures of deposits in the Swiss banks and other tax havens. 

Accusing the Congress of replacing the harsh provisions of Foreign Exchange Regulation Act through Foreign Exchange Management Act, the BJP said that FEMA as approved in July 1998 was on the lines of a draft prepared under the leadership of preceding Finance Minister P Chidambaram. 

Shourie also quoted an article contributed by Chidambaram in a national daily on August 25, 2002 to further prove the charge against Congress. 

"FERA also became a tool of oppression. Successive Governments persisted with FERA and added COFEPOSA 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," Chidambaram had said in the August 2002 article. 

On the Congress' claim that Advani was alerting those with illegal money abroad to take it away from Switzerland to other tax havens, Shourie asked, "Would the looters who've stashed away money in tax havens from India still need to be alerted after Germany got the names from Liechtenstein as long ago as last year?''

He further sought an answer from the Congress saying, "Would they still need to be alerted after Germany offered to furnish the names to Governments that asked for the names? 

NDA's future strategy on getting black money from swiss..

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

Collection of travel information about persons visiting Switzerland and other tax havens. This should start with cabinet ministers and other high-profile political personalities.

Monitoring tax havens that have high transaction frequency with India.

India to become a full-fledged member of the Financial Action Task Force.

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.

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.

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.

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.