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Public loot since 1947:


Let us bring back our moneyIt is one of the biggest loots witnessed by mankind -- the loot of theaam aadmi (common man) since 1947 by his brethren occupying public office.It has been orchestrated by politicians, bureaucrats and somebusinessmen. The list is almost all-encompassing. No wonder, everyonein India loots with impunity and without any fear.What is even more depressing in that this ill-gotten wealth of ourshas been stashed away abroad into secret bank accounts located in someof the world's best known tax havens. And to that extent the Indianeconomy has been striped of its wealth.Ordinary Indians may not be exactly aware of how such secret accountsoperate and what are the rules and regulations that go on to governsuch tax havens. However, one may well be aware of 'Swiss bankaccounts,' the shorthand for murky dealings, secrecy and of coursepilferage from developing countries into rich developed ones.In fact, some finance experts and economists believe tax havens to bea conspiracy of the western world against the poor countries. Byallowing the proliferation of tax havens in the twentieth century, thewestern world explicitly encourages the movement of scarce capitalfrom the developing countries to the rich.In March 2005, the Tax Justice Network (TJN) published a researchfinding demonstrating that $11.5 trillion of personal wealth was heldoffshore by rich individuals across the globe. The findings estimatedthat a large proportion of this wealth was managed from some 70 taxhavens.Further, augmenting these studies of TJN, Raymond Baker -- in hiswidely celebrated book titled Capitalism's Achilles Heel: Dirty Moneyand How to Renew the Free Market System -- estimates that at least $5trillion have been shifted out of poorer countries to the West sincethe mid-1970s. It is further estimated by experts that one per cent ofthe world's population holds more than 57 per cent of total globalwealth, routing it invariably through these tax havens. How much ofthis is from India is anybody's guess.What is to be noted here is that most of the wealth of Indians parkedin these tax havens is illegitimate money acquired through corruptmeans. Naturally the secrecy associated with the bank accounts in suchplaces is central to the issue, not their low tax rates as the term'tax havens' suggests. Remember Bofors and how India could not tracethe ultimate beneficiary of those transactions because of the secrecyassociated with these bank accounts?But this piece is not about Western conspiracy. Rather it is all aboutrecovering out own wealth from these countries. And in thisinitiative, for obvious reasons, one can expect absolute stonewallingby our own government as well as foreign ones.Naturally this has to be a public initiative -- an initiative by youand me, jointly ensuring that our government acts decisively. And inthis process there can be no place for any debate -- either you arewith this initiative or against it.Lingua franca in Zurich is, believe it or not, Hindi!Professor R Vaidyanathan of the Indian Institute of Management,Bangalore, is one of the most respected and well-known authorities onthis subject. Writing his columns on this subject in a Chennai-baseddaily recently he pointed out that "Zurich is the only European townwhere Hindi slogans are written on the side of the tram-cars. Ofcourse, it is supposedly linked to Bollywood, but the other Indiatraffic to Zurich is to be seen to be believed." Isn't this isstraight from Ripley's Believe it or Not?The reasons, according to him, for such heavy Indian traffic to Zurichare obvious. The secrecy laws of these banks mandate personal presencein these tax havens with their passports to operate accounts: passportnumbers are crucial to determine the secret code for opening andoperating these bank accounts. No wonder many people keep their oldexpired passports as prized possessions. Apparently this is not toshow their grandchildren where they travelled in their younger days.In one of my recent columns -- Fraud Survey: Will India Inc respond --I pointed out as to how a bank employee in Lichtenstein, a tax haven,provided details of some account holders to German revenueauthorities. Subsequent press reports on the issue point out to thefact that this list contains details of people of other nationalitiesas well. More importantly, German authorities have expressedwillingness to share this information with other nations too.It is thus no surprise that quite a few European countries -- viz.,Finland, Sweden, Norway -- have already expressed interest in the dataobtained by the German intelligence agency while Indian authoritieshave remained silent. No prizes for guessing why.What is galling to note is that it is suspected by the Reserve Bank ofIndia [Get Quote] that this ill-gotten wealth of the rich and mightyIndians finds it way back to the Indian stock markets through theobnoxious Participatory Notes (PNs) route. And if appropriately routedthrough Mauritius, tax experts opine that any profits arising fromsuch investments are exempt from taxes, both in India and Mauritius.What an arrangement!Will our politicians do an Obama?Nigeria, (General Sani Abacha), Peru (Alberto Fujimori) and thePhilippines (Ferdinand Marcos) are three well known cases whereinthese countries have been successful in getting back the money stashedinto such tax havens by their leaders.And such efforts are being increasingly duplicated by differentregimes in various parts of the world to recover such national wealthstashed abroad. The point to be noted is that the secrecy of suchbanks is no longer impregnable. Global experiences show that thedetermined will of a sovereign nation is sufficient to break it.Strangely, and in direct contrast to these global developments, thereis no such movement in India. In fact, post-1989 elections, corruptionhas ceased to be a central issue at the national elections.The answer to that is apparent. The instances quoted above are ofcountries that were once ruled by dictators. And action for gettingback the national wealth was initiated after such dictators weredeposed and replaced by regimes that were bitterly opposed to suchdictators.In contrast, in India every political party knows that it cannotaccuse the other of being corrupt for the fear of being becoming thetarget itself. Hence, there is an unwritten truce between politicalparties not to charge the other of being corrupt.In fact, elections in India offer a choice between Tweedledum andTweedledee to the electorate. As the Hindi saying goes: Hamam mein sabnangey hain (everyone is naked in the bath). No wonder, in India,while democracy facilitates frequent changes of government, the Indianbrand of democracy has not been potent enough to tackle the issue ofcorruption.And this substantially -- if not wholly explains -- as to why Indians,especially youngsters, are so cynical about political leaders,democratic institutions and even democracy. And this when BarackObama, the Democratic Party candidate for the US President elections,has along with few other colleagues in the US Senate introduced a billin early 2007 titled 'Stop Tax Haven Abuse Act.' This Act broadlyseeks to:* Establish presumptions to combat offshore secrecy to presumethat non-publicly traded, offshore corporations and trusts arecontrolled by US taxpayers, unless the taxpayer proves otherwise;* Provide special and sweeping powers to the Treasury authoritiesto deal with tax havens;* Strengthen detection of offshore activities by requiring USfinancial institutions that open accounts to report such actions tothe concerned authorities;* Strengthen penalties to deter such activities.No wonder Obama, despite all the apparent disadvantages, has endearedhimself to the electorate in the US. Crucially, would any Indianpolitician come up with a similar Bill (with appropriate Indianvariations) in our Parliament? This is indeed an open challenge to theUPA, NDA and the ever-ready to be born 'Third Front.'Corruption as an election agendaSimultaneously, we the people of this country must ensure thatcorruption becomes the central issue in the following generalelections. It is unfortunate that at a subconscious level, we seem tohave given up our fight against corruption. Perhaps its gargantuansize seems to have overwhelmed us psychologically. Apart from the needfor the legislation as mentioned above we also need to ensure:* The Election Commission should alter the format of electionaffidavits candidates to include declaration for the wealthaccumulated abroad.* We need to ban PNs and ensure that only those who reveal theiridentity get back their money through the PNs. Else these must beexpropriated by the government.* Ensure that we cooperate with all multilateral agencies on thissubject to ensure that wherever there is a global movement againstopaque banking and tax havens we must be active participants.But that is not all. Huge sums of public money have been stashedabroad by Indians in various tax havens. Our democracy and democratictraditions with all their pitfalls as explained above are incompetentto deal with the extant issue. And if we have to recover our money, itcan be done through a direct action of the aam aadmi -- you and me.Are you ready?