Time to unmask and name the tax- evaders – R. Vaidyanathan

Prof. R. Vaidyanathan“The Government of India got thousands of accounts of Indians holding illegal wealth in HSBC bank in Switzerland. The data was obtained by French from people who have stolen the data – more than 15000 accounts – from HSBC data files. The French have given the full data set to us.” – Prof. R. Vaidyanathan

In the midst of the Anna movement, one important thing has been pushed to the background.

It is the Gangotri of corruption but less focused and talked about. Barack Obama is concerned about it, Merkel is furious about it and Sarkozy wants to regulate it but the leaders of one of the most affected country namely India is not saying or doing anything about them. They are the tax havens or off-shore financial centers where the ill-gotten wealth of tax evaders of many countries is hoarded.

LGT Group LogoLichtenstein affair

Liechtenstein is a country as well as a convenient “letter box” for moneyed people all over the world to hide their ill-gotten wealth.

It is a small principality where if you jog a little longer you may end up in the next country.

The crown prince with a difficult-to-pronounce name like Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein — notice that the prince’s surname is that of the country — is angry with Germany for launching a massive tax evasion investigation involving funds hidden away in his countries vaults.

Germany’s intelligence agency seems to have paid an unnamed informer more than $ 6 million for confidential and secret data about clients of LGT Group, a bank owned by the Prince’s family.

The revelations have already led to the resignation of the head of Deutsche Post — the former German mail service — which is currently the worlds largest logistics company in the world.

Hans Adam IIThe Lichtenstein leaders are furious and have focused all their ire at the theft of the data rather than on the facts of the case.

The German Government has announced that it would share information on accounts held in the tax haven with any Government that wanted it.

The spokesman for the German Finance Ministry, Thorstein Albig, has indicated that they would respond to such requests without charging any fees for the information.

Finland, Sweden, and Norway have expressed interest in the data obtained by the Berlin intelligent agency.

Now the interesting and intriguing part. Indian government was very reluctant to get that data from Germany.

It finally got the data under the pressure of the then leader of the Opposition in 2009. More than hundred names are presumably in that list. But the results are not shared with Indian citizens.

Isle of Man BankIt is common knowledge that trillions of dollars of Indian money is in various tax heavens like Antigua, Switzerland, Bahamas, Liechtenstein, Isle of Man, and St. Kitts, etc.

Throughout the Nehruvian socialistic period under invoicing of exports and over invoicing of imports was very common and the funds were siphoned off to these tax heavens. In a socialistic way all leaders, be they business, political, film, sports or bureaucratic participated in creating what we may call “secular ill-gotten wealth” that is cutting across any type of caste or creed distinctions.

The Government is not releasing the names obtained from Germany and claims it s due to the double taxation treaty with Germany. The stolen data by Germany from its neighbor is no where linked to our treaty with Germany since it is not pertaining to any misdemeanor by Indians vis-a-vis Germany. But the Government is intransigent.

HSBC LogoHSBC Illegal Money

Few months earlier, the Government of India got nearly a thousand accounts of Indians holding illegal wealth in HSBC bank in Switzerland. This data was obtained by French from people who have stolen the data — more than 15000 accounts — from HSBC data files. The French have given the full data set to us. The Government of India is not telling the citizens what action it is undertaking.

It does not want to share the names.

For everything, the Finance Minster is chanting the same mantra of double taxation treaties, when those treaties do have only prospective effect. What is needed is the political will to bring back the illegal funds accumulated abroad.

From Bofors to CWG to 2G to Hasan Ali — all illegal money takes us to tax havens. It is estimated that between half a trillion and one half trillion is the illicit money stashed abroad by our political leaders / business barons / bureaucrats / film stars and sports icons.

Hasan AliWhy we should act

The issue is of paramount importance due to four reasons. Even two paise experts on Indian stock markets know that increasingly our markets are moved by global flows — both inflows and outflows of funds. Such flows may be ill-gotten wealth of Indians kept abroad in tax havens or domestic funds are sent out and brought back to facilitate some activities.

In the context of concern expressed by our own National Security Advisor regarding possibility of terror funds coming through financial markets the second concern is are we adequately sterilised in terms of know your customers etc.? Third is about our ability to formulate policies without being black mailed by foreign Governments.

For instance, many might not know that the owner of more than 90 percent of worlds currency printing business from Switzerland namely Mr. De La Rue Giori, — along with his girl friend — was one of the passengers of the hijacked plane to Kandahar.

It is easy to imagine the type of pressure applied by the Swiss on our Government at that time.

If large number of our elites is having illegal money in Switzerland then we are prone to manipulations in terms of policy formulations.

Even now it is not clear if our Foreign Minster handed over dollars or Swiss currency to the hijackers.

Wikileaks LogoAny how the true history may come out some time in future. It is pertinent to note that if CIA knows about our leaders, then ISI may also have that data. The fourth issue is the most important one. Is there a political will among India’s ruling class to put the issue of tax havens on global agenda and compel other developed countries to facilitate closing down of these anachronisms in the twenty-first century? These tiny island absurdities had their time, their crooked purpose and place in history.

Twentieth century was that of privacy and secrecy.

But in the 21st century integrity is the motto and transparency the mantra.

India should pass a law making all the illegal wealth abroad as part of a trust to be created. We should along with other emerging markets arm twist these tiny islands to give back our money. India should bring sanity to global financial markets and joy to millions of pauperized persons in Latin America, Asia and Africa. Let us be pro-active and get back our money and clean up the global financial system. – The Free Press Journal, August 30, 2011

» See also Indian Black Money: The Swindler’s List – Tehelka

» R. Vaidyanathan is Professor of Finance, Indian Institute of Management Bangalore, and can be contacted at vaidya@iimb.ernet.in. The views are personal and do not reflect that of his organization.

5 Responses

  1. […] Time to unmask and name the tax- evaders – R. Vaidyanathan […]


  2. […] Time to unmask and name the tax- evaders – R. Vaidyanathan […]


  3. […] to R. Vaidyanathan, Professor of Finance at the Indian Institute of Management, Bengaluru, the average amount stashed […]


  4. Its hightime..really.. to expose !!


  5. TEHELKA has accessed 16 of the 18 names, of which we are putting out 15 right now. These names include individuals as well as trusts. At this point, we are putting out 15 names without disclosing details like their addresses, the businesses they are involved in and the total money they have stored away in Liechtenstein. Abiding by the basic journalistic principle of proving the accused an opportunity to present their side of story, TEHELKA has approached each of these individuals involved and is awaiting their response.

    Once these individuals respond, we shall share the full details of who these people are and what they do. We shall also put out their responses. This, then, is the list.

    1. Manoj Dhupelia

    2. Rupal Dhupelia

    3. Mohan Dhupelia

    4. Hasmukh Gandhi

    5. Chintan Gandhi

    6. Dilip Mehta

    7. Arun Mehta

    8. Arun Kochar

    9. Gunwanti Mehta

    10. Rajnikant Mehta

    11. Prabodh Mehta

    12. Ashok Jaipuria

    13. Raj Foundation

    14. Urvashi Foundation

    15. Ambrunova Trust

    The three trusts in this list are registered outside India.

    The government has been claiming so far that a detailed investigation into all the bank account details provided by Germany is underway and making the names public would violate the agreement between two sovereign countries, India and Germany.

    See LGT Bank: The Indian List by Tehelka


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