Reason and due procedure, not emotion and activism will solve Black Money case

Reason and due procedure, not emotion and activism will solve Black Money case

(This was sent by an IndiaFacts reader and supporter, Shwetank Bhushan)

The most pertinent question is, if we want a lawful state or we just want to take out our frustration? I do not understand, why names against whom, there is no legal case to be made in court should be revealed except for gossip and some juicy loud slogans about how the entire flock is looting us and thereby contribute to increasing the TRPs of the gossip mongers.

Whether we agree or not, the antics of one political party have spoiled all of us

No one needs to reach a logical, reasoned conclusion. Everyone wants to have fun. Why bother about court cases? Have some living room/twitter discussions, protest against corruption and that’s it. When a Government says we have actual cases to pursue and charge sheets will be filed…well…yawn that’s too boring.

Our experience with the past has made us so despondent that we don’t care anymore. We’ve never heard of a democratic, functioning country where Government starts throwing names in public of private individuals without having any legal case against them.

The whole problem is the half-baked stories in the media and some extra enthusiastic political parties. In any criminal investigation, do agencies start revealing information of all the suspects in public whether or not they have evidence against them to make a legal case? I would urge the Soap Opera lovers to do some fact checking. Please.


What the Attorney General said in Supreme Court is this: all details cannot be disclosed about those against whom prosecution hasn’t started. Very cleverly, most of the media has hidden a vital fact that the Government ’s stand is for not revealing those against whom investigation still pending. And why not? The reason is not just DTAA obligations, but also the Constitutional right to privacy. Read the Paragraph containing a clear operative order of the SC. It’s not just DTAA…

“While some of the accounts and the individuals holding those accounts are claimed to have been investigated, others have not been. No conclusion can be drawn as to whether those who have not been investigated or only partially investigated and proceedings not initiated have committed any wrong doing. There is no presumption that every account holder in banks of Liechtenstein has acted unlawfully. In these circumstances, it would be inappropriate for this Court to order the disclosure of the names even in the context of proceedings of Clause (1) of Article 32.”

The revelation of details of Bank accounts of individuals, without establishment of prima facie grounds to accuse them of wrong doing, would be a violation of their rights to privacy. Details of bank accounts can be used by those who want to harass, or otherwise cause damage, to individuals. We cannot remain blind to such possibilities, and indeed experience reveals that public dissemination of banking details, or availability to unauthorized persons, has led to abuse. The mere fact that a citizen has a bank account located in a particular jurisdiction cannot be a ground for revelation of details of his or her account that the State has acquired.

The Union of India shall forthwith disclose to the Petitioners all those documents and information which they secured from Germany in connection with the matters discussed above, subject to the conditions in (ii) below.

That the Union of India is exempted from revealing the names of those individuals who have accounts in banks of Liechtenstein and revealed to it by Germany with respect of who investigations/enquiries are still in progress and no information or evidence of wrong doing is yet available.” 

So, does DTAA allow information to be disclosed once charges are filed? Yes.

Read Article 26 (Exchange of Information) DTAA with Germany for example.

But no! The clamour seems to be this: reveal some names and let Germans who are providing some actual, crucial proof or clues that could help us in actually pursuing cases to conclusion go to hell. After all, all these legalities which are ultimately the only thing that would actually nail criminals jail are totally irrelevant. What matters most is: give us names.

Yes, some BJP folks did say earlier that the UPA should reveal all account holders having foreign accounts in tax havens and created hype. The BJP should not deny that. Delay in delivery on promises made during election campaign is only a temporary matter.


The other view is that in public court proceedings, the government can disclose the names. The DTAA itself says that the information can be disclosed in public court proceedings. As of now, there are many leads, but to give startling revelations, you need facts. Without facts, you will be making allegations and can only go to a certain extent and after that, you will have no real material or powers to probe them. My view is that when the court says the government has to disclose, it must disclose. Which is happening now.

[pullquote]In any criminal investigation, do agencies start revealing information of all the suspects in public whether or not they have evidence against them to make a legal case?[/pullquote]

At the core of the misunderstanding of the issue is our inability to distinguish between Black Money (money on which tax has not been paid) and Red Money, where the source of such income itself is illicit and hence the owners seek utmost secrecy for obvious reasons. Red Money is earned through illegal means like drug deals, illegal weapons sale, terror links, public exchequer scams etc.

The owners of such monies most certainly do wish to remain hidden. Tax evasion is a very minor crime compared to earning and accumulating the Red Money. Therefore Red Money, the greater of the two evils, should not be clubbed with Black Money. The danger here is to treat the entire issue of monies parked in secret accounts in tax heavens as a mere tax evasion issue. Red Money is not only tax evasion, it is treason.

DTAA or Double Taxation Avoidance Agreement ensures that the income generated is either taxed in the country of origin or in the country where the taxpayer is resident. Thus we may note that DTAA involves genuine tax payers having legitimate income and are not to those who possess illicit income. It is apparent that the confidentiality of the information applies only to situations where DTAA is applicable in the first place. Surely, DTAA is not intended to benefit buccaneers evading taxes in both countries and definitely not those who shy from even owning the income in the first place.

In fact, the origin of this ‘information’ is from LGT Bank in Liechtenstein, where Germans were successful in obtaining details of account holders by apparently bribing an employee of that Bank. Having obtained the details in 2008, the Germans were willing to share the ‘information with all sovereign governments including India. The next set of data was received from the French when they laid hands on an employee of the Zurich branch of HSBC, Switzerland. This data contains the names of approximately 600 plus Indians. For the past decade, the UPA Government  acted with great reluctance and with a calculated aim to obfuscate the matter, even as the French and German have provided information to us on a platter.


Now where does DTAA between India and Germany figure in this illegal data obtained from Lichtenstein by Germans? Why did the UPA Government  seek information under DTAA? Did the Germans share this information with other countries under their respective DTAAs? And crucially where is the confidentiality clause in such ‘information’ obtained illegally?

This entire operation was carried by the UPA Government  to attract the confidentiality clause under DTAA and also the Right to Privacy of individuals. Once our Government has sought information under DTAA, it cannot go back. Most of intellectuals debating on TV gulp this fact.

Let’s not talk about treaties. We can always violate treaties and yet have the powerless Germans lick our feet in submission and continue to give us further information and support so that the prime time media can have its Prime Time and Super Duper Prime Time shrieking festival going. I am not saying that the media should not pursue it relentlessly. But the problem is that some powerful sections of the media in India are also corrupt.

It is possible to recover the Black and Red Money. By legal action, money siphoned off earlier from other countries has been recovered. But our Income Tax department and Enforcement Directorate can’t do it because it consists of people who have colluded with such illegal activities. The only possibility is that our intelligence agencies be used for this purpose. First, we must get clues, vital leads, names of the account holders and bank names. Only then can we start legal action.

We all understand that the real issue is the Red (illicit) Money and surely that sustains tax heavens which offer secrecy to the generators of such illicit money, launders it and allows it to be recycled into the global economy as clean money. It is therefore natural that the names of the illicit money account holders, the drug peddlers, illegal arm dealers, corrupt ministers be made public in national interest, because not merely the tax portion but the entire Red Money belongs to the Government.

But this can be done only with the right intent and through proper court cases by filing charge sheets one by one and bringing them to justice. The first thing the present Government should do is to explain the position of the French and German Governments  about their objection to making this information public to the Indian citizens as well as to the Indian Supreme Court.

Why the UPA folks should be the last ones to make any comment on the recent development

First, the very idea of an SIT probing black money issue was strongly resisted by the UPA through the Solicitor General. Sr. Advocate Sri Anil Divan who specifically argued that, having regard to the nature of investigation, its slow pace so far and the non-seriousness on the part of respondents, there is a need to constitute a Special Investigation Team (SIT) headed by a former judge(s) the SC. However, this particular plea has been vociferously resisted by the Solicitor General. Relying on the status report submitted from time to time, the learned Solicitor General stated that all possible steps were being taken to bring back the monies stashed in foreign banks, and that the investigations in cases registered were proceeding in an appropriate manner.

But then the Supreme Court made a scathing observation on how UPA utterly messed up with its investigation in a high profile evasion case:

“We must express our serious reservations about the responses of the Union of India. In the first instance, during the earlier phases of hearing before us, the attempts were clearly evasive, confused, or originating in the denial mode. It was only upon being repeatedly   pressed by us did the Union of India begin to admit that indeed the investigation was proceeding very slowly. It also became clear to us that in fact the investigation had completely stalled, in as much as custodial interrogation of Hasan Ali Khan had not even been sought for, even though he was very much resident in India. Further, it also      now appears that even though his passport had been impounded, he      was able to secure another passport from the RPO in Patna, possibly with the help of a politician.”

“However, in the absence of any satisfactory explanation of the slowness of the pace of investigation and lack of any credible answers as to why the respondents did not act with respect to those that were feasible and within the ambit of powers of Enforcement Directorate itself, such a custodial investigation, leads us to conclude that the lack of seriousness in the efforts of the respondents are contrary to the requirements of laws and constitutional obligations of the Union of India. It was only upon the insistence and intervention of this Court has the Enforcement Directorate initiated and secured custodial interrogation over Hassan Ali Khan.”

hassan ali khan

The UPA Government’s reply?

“From the Status Reports, it is clear that the problem is extremely complex, and many agencies and departments spread across the country have not responded with the alacrity and urgency that one would desire. Moreover, the Union of India has been unable to answer any of the questions regarding its past actions and their implications, such as the slowness of the investigation, or about grant of license to conduct retail banking by UBS, by reversing the decision taken earlier to withhold such a license on the grounds that the said bank’s credentials were suspect.”

The Supreme Court did recognize that bringing back money maybe beyond control. But UPA messed up even with things within control.

“We do recognize that the degree of success, measured in terms of the amounts of monies brought back, is dependent on a number of factors, including aspects that relate to international political economy and relations, which may or may not be under our control. The fact remains that with respect to those factors that were within the powers of the Union of India, such as investigation of criminal nexus, threats to national security, etc were not even attempted.”  

Brazen. Shameless. Bizarre. Nothing else can explain this.

[pullquote]Delay in delivery on promises made during election campaign is only a temporary matter.[/pullquote]

But the action to recover black money abroad will anyway be a slow process. It needs the cooperation of almost the entire world. The government has to create an atmosphere in which the world sees that the Indian government is keen on quick action. Till the UPA was in power, the world had a feeling that India was not keen to recover black money. This perception has to be reversed. The first thing the government can do today is to expeditiously file prosecutions against people who have concealed the money in HSBC and subsequently disclose their names.

Recovering black money is a very strategic issue as the Indian government has to make alliances with many countries. Under the UPA Government, there was zero effort in this direction. The present government can take these efforts because it has a high level of influence with most of the countries.

Prime Minister Narendra Modi knows this is going to be a very important agenda for him. There is no one in the government who can think otherwise if the most powerful person, the PM, wants to take action to recover black money.

The present Government  on 27 June this year, did submit all the names to the SIT which is working under close supervision of the Supreme Court. In August, the Apex Court made an observation that it is satisfied with the progress in the Black Money case. It asked the Government to resubmit the names in a sealed envelope to the Court. It is evident that either the Court does not trust its own SIT or the Union of India.

To conclude, if the present Government  prevaricates or inordinately delays probing the people whose names are on the list, we surely can equate it to UPA. Merely speculating all sorts of things coloured with judicial or other activism will only confound or may even backfire on such a serious matter.