Pranab Mukherjee’s Dilemma: Black Money, Blue Funk? by Rajinder Puri SignUp

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Pranab Mukherjee’s Dilemma: Black Money, Blue Funk?
by Dr. Rajinder Puri Bookmark and Share

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? 

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