Why India too is a TAX haven now!

M R Venkatesh
It would seem when it comes to secrecy on bank accounts the Indian government seems to have a tacit arrangement with the Swiss -- even if the Swiss fail in protecting the identity of crooks, India will, says M R Venkatesh.

The story is more than three years old. Unwept and unsung, not many within our media or from the establishment have given enough attention to it.

Yet, by a strange turn of events this has come to occupy centrestage in national media and to dominate political discourse in the following weeks. In the process it threatens to bring into open India's well-kept secret.

According to an article, titled Mass Leak of Client Data Rattles Swiss Banking by David Gauthier-Villars and Deborah Ball (The Wall Street Journal, July 2010), two employees of HSBC -- Herve Falciani and Georgina Mikhael -- had sent emails more than two years ago to tax authorities across Europe.

Accordingly, they claimed that they could provide a large list of clients of a Swiss-based private bank. The emails were sent to Germany and the French investigating authorities.

HSBC officials, in turn, allege that Falciani copied thousands of files of wealthy clients of its Swiss private-banking arm.

Swiss authorities are reportedly investigating whether these two employees stole bank records and violated banking secrecy laws in Switzerland.

Interestingly, the French got the data when its police raided Falciani's residence at the behest of the Swiss authorities who had, in turn, launched an investigation into the alleged violations of banking secrecy back in Switzerland.

Crucially, the French sent copies of the data to Switzerland, but kept back the original files to pursue possible tax cheats.

Expectedly, the French authorities found thousands of accounts and bank-transfer details. Sifting the data, apparently the file contained data on about 79,000 clients and 20,000 companies!

The list includes more than 8,000 French, about 1,500 Americans and as many British residents.

Subsequently, the French have reportedly made available this data to governments across the world for possible pursuits of their tax cheats.

If press reports are to be believed that included Indian government too as there were allegedly several hundred Indian names in the list.

Much was not heard about this list till last week when the Parliamentary Standing Committee on Finance Ministry, headed by senior Bharatiya Janata Party leader and former finance minister Yashwant Sinha, raked up this issue and gave a 15-day deadline to the government to reveal the relevant names.

What is adding fat to the fire is the opinion of the Attorney General who has reportedly advised the government against making the disclosures.

The committee has also reportedly sought this opinion given by him. Well, what will happen in the next 15 days -- when the Parliament will also be in session -- is to be seen.

However, press reports suggests that finance ministry is of the opinion that any disclosure will end India's chances of getting any further lists from banks in tax havens.
And this argument was used in the Lichtenstein Bank case too where similarly some employee of the bank stole its data and gave it to German authorities. And that list included Indians too.

This argument of the finance ministry, stonewalling the matter in right earnest, is extremely bizarre. After all, what the French or the German have given us is in fact stolen data.

Crucially, they have not provided anything original where the secrecy clause in Double Taxation Avoidance Agreement will operate. Put simply it will not operate when data is procured through dubious means by other governments.

So while the Indian government may be reluctant to get data from Swiss banks in the (stealthy) manner that the French or German obtained, the fact remains that governments worldwide will increasingly be procuring data by means fair and foul, and sharing with governments worldwide.
Yet, it is inexplicable that we are loath to disclose the names of our tax offenders and criminals, much less take the matters to a logical conclusion.

Strangely this is the argument that has been repeatedly put forth by our government.

Remember, those who are named in these lists are no ordinary tax evaders operating in India. Let us not forget that they are extremely well connected, efficient and organised criminals.

Yashwant Sinha is spot on when he argues that black money cases were not merely instances of tax evasion. It is in this connection he reportedly pointed out, "Income tax is only the starting point of the investigation."

The above is from the newsletter I receive from Rediffmail.

It reminds me of two people fighting.
One of them, the weaker, makes the most noise, shouts loudly and allows his friends to hold him.
The other, just slaps him every time he raises his voice.
Our Congress government continues to make noises to show that it is taking action but always allows itself to be held back from taking action for they know that the list includes mostly Congress politicians led by Rajiv Gandhi.
The congress tries to derail any agitation against it by cocking up frivolous charges by the Income Tax, Enforcement Directorate and the CBI all three being its pet dogs whom they drag wherever they want like we see in the early mornings dog owners dragging their dogs for their morning shit,