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My Word
Pranab Mukherjee’s Dilemma: Black Money,
Blue Funk?
by Rajinder Puri
The worst aspect of the Bofors case was
not its corruption. Corruption in varying degrees is worldwide.
The worst aspect was the cover-up of the corruption. Cover-ups
too are worldwide. But nowhere are they as brazen and shameless
as they are in India. Bofors set a new standard of
shamelessness. After the Bofors case there followed a whole
stream of scandalous crimes that were consistently covered up
with equal shamelessness. HDW Submarine case, Jain Hawala case,
Oil for Food scam – there is a long list of scandals covered up
with contempt for public opinion. The politicians, the
investigators, the judiciary and the media all got badly tainted
in this process.
The government’s embedded media wimps destroyed the credibility
of their profession. But whatever gloss India ’s ruling class
may put on the ugly truth, people are not deceived. People know
the truth whatever the courts may decide. Why, even former Chief
Justice JS Verma, the current darling of establishment
moralists, demanded a retrial of the Jain Hawala case after
himself presiding over the Supreme Court bench which heard this
brazenly mishandled case.
Now there is a very, very slim chance that things may
change. Globalization and the information era are upon us. And
US President Barak Obama has a bee in his bonnet. He wants to
punish all the tax evaders in the US who stashed away their
illegal funds in tax havens. For a start Obama has zeroed in on
the queen of all tax havens, Switzerland.
In August the U.S. arm twisted Switzerland to dent its famed
tradition of banking secrecy. It compelled Swiss banking giant
UBS AG to disclose the names of 4,450 American clients suspected
of hiding assets in secret Swiss accounts, out of a total US
52000 account holders. This development is expected to prod
thousands more UBS clients in America to voluntarily disclose
their financial details to the Internal Revenue Service. Thereby
they may avoid jail, not tax penalties. President Obama
reportedly is determined to get lists of all past account
holders regardless if they have shifted their deposits to other
tax havens. Swiss sources have acknowledged that UBS has no real
choice in turning over the names. This is bad news for Indian
VIP account holders who directly or indirectly also figure in
the lists.
Contrary to his public posture Finance Minister Pranab Mukherjee
is in a dilemma. The Finance Ministry had claimed that it was
trying to recover black money stashed abroad. But its actions
belied its words. The German government had given a list of
names of Indians whose money is lying in the LGT Bank of
Liechtenstein . The Indian government refused to disclose the
names provided by Germany . It claimed that it was prevented by
certain legal hurdles put up by Germany . Did the Finance
Ministry deliberately create those legal hurdles? Germany itself
has released its own list. How can it prevent India from
releasing the list which it provided to India?
The Finance Ministry also got information pertaining to the Pune
stud farm owner Hasan Ali Khan's huge amounts deposited in the
UBS Bank of Switzerland. However, according to Swiss authorities
while the Indian government publicly sought information in Swiss
account holder Hassan Ali Khan’s case, it submitted “forged”
documents that were required by Switzerland ’s Federal Office of
Justice. Swiss authorities say that they want to help in the
case if Indian authorities could satisfy the Swiss government's
demand for proper documentation. Since April 2007 the Indian
government failed to respond to the Swiss request!
Pranab Mukherjee’s dilemma is understandable. The lists of
illegal account holders could include the names of leading
politicians across political parties. Therefore the paradoxical
situation arises. For public consumption the UPA government
moves heaven and earth to reclaim Indian black money stashed
abroad. Privately it is haunted by the fear that by doing so it
could ring its own death knell. The dilemma does not end there.
It becomes far more sinister.
Switzerland ’s economy is in recession. Swiss banks want to
start operating in India and even participate in the Mumbai
Stock Exchange. The Indian government put up a show of demanding
transparency from the Swiss banks regarding the identities of
the illegal Indian account holders in their lists. The Swiss
have not provided the lists as yet. The government went ahead
and allowed the Swiss banks to open branches in India . UBS
obtained permission to open a retail branch in February 2008.
Switzerland ’s biggest bank, Credit Suisse, got permission to
start operating this month. Permission for the Swiss banks to
play the Mumbai Stock Market has been cleared and awaits
ratification. Two questions arise. First, does the Indian
government truly want the lists of illegal account holders to be
made public? Secondly, would the government dare deny the Swiss
when their banks have full knowledge of all the corrupt Indian
VIPs who have held secret accounts in their vaults?
The situation becomes more ominous. America has the lists of
illegal account holders that include many NRI Indians who could
be operating on behalf of Indian politicians. Given the close
interaction between governments and intra-penetration by their
respective intelligence agencies, US information about corrupt
Indian VIPs could easily spread to other governments. Can the
Indian government be trusted to avoid becoming a victim of
blackmail by foreign governments privy to such information and
willing to use it?
In November 1991, six months after his death, the highly reputed
Swiss magazine, Schweitzer Illustrate, alleged in a report that
there were numbered Swiss bank accounts in the name of Rajiv
Gandhi equivalent roughly to two billion US dollars. That report
was never publicly denied. The failure to do that leaves one
with a most uncomfortable feeling. If India ’s top politicians
are vulnerable to blackmail, how independent can be the
government’s policies?
October 20, 2009
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