Subramanian Swamy-led body to recover wealth in tax havens

In a bid to recover the illicit wealth of the nation stashed away in tax havens, an anti-corruption group led by Janata Party president and Centre for National Renaissance chairman Subramanian Swamy has decided to lodge a complaint with the Central Bureau of Investigation (CBI) on November 28.

The Action Committee Against Corruption in India (ACACI) intends to move the court, if the CBI refuses to register the first information report (FIR), Swamy said. “The CBI has power to register FIR against unnamed persons having accounts in foreign banks.”
He was speaking to the media after the ACACI meeting on November 3.
The committee will plead to court to issue Letters of Rogatory to seek information from tax havens, Swamy said, adding that an Ordinance should be issued to nationalize all foreign accounts held by Indian citizens in tax havens.
The ACACI also resolved that participatory notes (PNs) are used for money-laundering and re-routing the money into the stock markets thereby rigging it. The PN routing ofhawala transactions is a major contributory cause of galloping inflation affecting the common man and further impoverishing the people, the committee said.
Presenting a report on PNs, ACACI member and chartered accountant M.R. Venkatesh said these should be banned. To prevent a PN-triggered financial crisis in India like the one that devastated East Asian tiger economies in 1997, the committee decided that ACACI chairman Swamy would write to Prime Minister Manmohan Singh for ban on PNs. Incidentally, it was one of the recommendations of the Tarapore Committee.
The ACACI resolved to discuss the issue of Indians’ money in foreign banks with financial monitoring institutions such as the Enforcement Directorate, the Reserve Bank of India, and the Securities & Exchange Board of India. It will also take up the issue with international organizations such as the UN for urgent, concrete, and time-bound remedial measures and for strengthening these institutions.
For this purpose, the ACACI will open chapters in the US, the UK, Switzerland, and Singapore and send committee members abroad for investigation.
In his presentation at the meeting, S. Kalyanaraman said stashing money in foreign banks is an unpatriotic act, because by indulging in such practices one does not only show distrust for the financial system of one’s own country but also deprive it from the funds that could be used for growth and development.
He lamented that nothing has been done to improve the KYC (know your customer) norms for non-Indians. He took a dim view of the Financial Intelligence Unit, alleging that it has done nothing to check questionable flows.
Commenting on another important subject, he said, “We cannot track terror financing unless we know the source of NGO funding.”
After the September 11 incident, the US got into action and brought all transactions under its scrutiny, but India has done little in that regard, Kalyanaraman said.
He favored the initiation of dialogue with Swiss lawmakers and lawyers about the money in their banks. “We must tell them that this belongs to India, that if they help us, it can be used for the uplift of the poor.”
Making a strong case for a law to tackle the menace, he said that the Indian legislation should be congruent with the best international legal practices.
Venkatesh said PNs have come to prominence over the years. Till a decade ago, not much was known about them, he said, adding that even a Sebi chief was not aware about them.
UBS, he pointed out, has been accused of various improprieties, including the big fall in Sensex in May 2004, following communist leader A.B. Bardhan’s statement that let disinvestment go to hell. But UBS always got away because laws were not efficacious enough to nail down the wrongdoers.
B.R. Lall, a retired Indian Police Service officer who served as director general of police (Haryana) and joint director of CBI, said that it is a myth that income tax evasion is a recent phenomenon. “Right from Independence in 1947, the problem has plagued public finance, despite the fact that at that time our income tax rates were among the lowest in the world. This was also the reason that the government started hiking the rates, going up as high as 97 per cent in the early 1970s.”
Giving an instance of the quantum of black money generated in the country, he said that truckers alone paid a bribe of Rs 22,000 crore a year. This allows them to overload their vehicles by 100 to 150 per cent, an activity which contributes the generation of black money worth at least Rs 6 lakh crore.
It was pointed out at the meeting that unrecorded income or black money is about 2.5 times the nation’s official GDP. Tax evasion during 50 plus years from 1950 to 2009 was estimated to be Rs 450 lakh crore ($10 trillion) which is a staggering amount compared with the nation’s external debt of Rs 10 lakh crores ($224 billion).
The ACACI also resolved for the establishment of a national property register so that benami realty deals could be checked.

Members of the Action Committee Against Corruption in India
(Office: A-77, Nizamuddin East, New Delhi-110013 (Tele: (011) 24357388)

Chairman:
1. Dr. Subramanian Swamy

Members:
2. Shri K.N. Govindacharya
3. Shri S. Gurumurthy
4. Shri J. Gopikrishnan
5. Shri K. Sampath Iyengar
6. Shri A.K. Doval, IPS (Retd.)
7. Dr. S. Kalyanaraman
8. Shri B.R. Lall, IPS (Retd.)
9. Prof. M.D. Nalapat
10. Shri Sarju Rai
11. Prof. R. Vaidyanathan
12. Shri A. Surya Prakash
13. Shri V. Sundaram, IAS (Retd.)
14. Shri M.R. Venkatesh

Member Secretary:
15. Shri Abhishek Joshi

Resolutions Adopted by the Action Committee Against Corruption in India
1. In its second meeting held in New Delhi today under the Chairmanship of Dr. Subramanian Swamy, ACACI considered a Background Note prepared by the Chairman on the multi-dimensional effects on the nation caused by rampant corruption.
2. In order to recover the illicit wealth of the nation stashed away in tax havens, the Committee heard a presentation made by Dr. Kalyanaraman. ACACI hence resolved to demand an Ordinance issued to nationalize all foreign accounts held by Indian citizens in these havens. This is legally tenable and is consistent with a similar suggestion made by Supreme Court distinguished Senior Advocate Fali Nariman, while speaking in the Rajya Sabha and also in a media interview.
2. ACACI also resolved that Participatory Notes (PN) is used for money-laundering and re-routing the money into the stock markets thereby rigging it. ACACI also notes that PN routing of hawala transactions is a major contributory cause of galloping inflation affecting the common man and further impoverishing the people. The Committee considered a Report on PNs prepared by Mr. Venkatesh, who is a member of the Committee.
3. To prevent a PN triggered financial crisis in India of the type which occurred in Asian tiger economies in 1997, it has been decided that the ACACI Chairman would write to the PM seeking a ban on PNs as demanded by the Tarapore Committee.
4. ACACI deliberated on a report prepared by B.R. Lall on the inadequacy of measures by Govt. of India to cope with the serious issues of black money and tax evasion as rampant corrupt practices in India. One assessment is that unrecorded income (black money) is about 2.5 times recorded income (legal financial transactions) measured as the nation’s GDP. Tax evasion during 50 plus years from 1950 to 2009 was estimated to be Rs. 450 lakh crores ($10 trillion) which is a staggering amount compared with the nation’s external debt of Rs. 10 lakh crores ($224 billion). These are the basic causes of continuing corruption in many walks of life in India and the measures adopted by Govt. of India so far are merely self-serving and totally ineffective.
5. ACACI resolved to discuss these issues further with financial monitoring institutions such as ED, RBI, SEBI, as well as International Organizations such as the UN, for urgent, concrete, time-bound remedial measures and strengthening of monitoring by these institutions.
6. For this purpose, the ACACI will open chapters in US, UK, Switzerland and Singapore and send Committee members abroad for investigation.

Posted on : 11/4/2011

http://indiaright.org/storyd.asp?id=641

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s