Friday, June 08, 2012

Guide to Bringing Black Money Back - for Dummies (aka our government)

I am writing after a gap of a long time, couple of years or more maybe. There are so many things to write about, so many things to consider... it is mind boggling actually. And once or twice it has stopped me from re-starting the blog.

I keep thinking .. where the hell do i start. You pick up a newspaper and the foolishness and imbecility of the gov. of your country stares you in face. ON ALL 24 pages. You switch on the news - Any channel - except some channel which occasionally lightens the mood by talking about cow kidnapping aliens. You don't know where to start....

But there are a few topics which coming back and haunting us over and over again.. which are in the news for all the right reason and which are the things fundamentally wrong with our country ( a long list).

One of them is the oft raised and currently hot topic of getting black money back to India. Some may say its already been discussed ad nausea um . Others may say the Indian gov. has no clue on how to act on it and it needs to be discussed further.
There is ofcourse a third and growing group (by leaps and bounds) which believes the Indian government is deliberately being dumb about it (as if it was possible to be dumber than it already is) and turning a blind eye from obvious solution.

Is the Indian gov. and the party in power content to let the Baba Ramdevs and the Anna Hazare's hold their agitations, call people on the street while it realizes that this can do no further damage to their image and credibility .. for what can damage a wreck further ?????

Or is it that the gov. has reconciled itself to a defeat in 2014 and just wants to ride out the storm like an ostrich in the sand ?

The Finance minister recently presented a white paper on black money in Parliament. I think he took the term "white paper" quite literally because all he presented after months of so called research was a rehashed and bereft of ideas "WHITE" paper full of holes in it.

Enough of rhetoric.. now coming to the root cause of the issue.

a) The root cause of the issue is that the Swiss banks have secrecy laws which basically mean that they will NOT provide banking details of black money offenders until they have concrete proof (which is as per their subjective definition and hence never possible) and even so their is no concrete mechanism of repatriation of this money
b) They will not cooperate with investigation of individuals suspected of black money laundering and keeping black money in complex structures with them IRRESPECTIVE of whether this money is amassed via gun running, corruption, human trafficking, heroin smuggling or whatever else nice things happening around the globe.
c) Actually they will do both a) and b) if their arm and b***s are twisted a little atleast by some country who actually has a the guts to do it. And one such country has shown the way.. who else but USA !!!!

Our Finance Minister in the Parliament during one speech i remember seeing on TV - said very categorically something to the effect of " i cannot take the army and tanks into switzerland and ask them to help me" .

SO what is the solution... There are many solutions and i will tell 3 of them, one which requires gov. intervention and 2 which actually (and thankfully do not). and if these solutions are worked on you can be sure the Swiss will have what the British say "their knickers in a twist" and will have to assist in the legitimate needs of India finally.

1. DECLARE A BOUNTY: This is something which seems to be a very small step but may actually help in a big way in bringing the perpatrators to book. Assume for a minute all that is said about the black money is true. That there are corrupt politicians, arms dealers, middlemen and businessmen who have stashed money abroad, laundered it (hiding source - which is very likely illegal) and who have billions of dollars in swiss banks which is Indian wealth.

Were they able to do this by themselves ???? No, never. It is not possible. For every act of money laundering, stashing of money there are people involved in between ranging from their driver who drives you somewhere to the computer operator who may have installed some special software in your computer, to the security guard who wonders what's with that black briefcase that Seth ji carries with so much tension. These are people who at times have suspicion and at times have full knowledge such as political lackey cum private secretaries. They do not ever betray their masters.

Why ?

In Italian mafia language - because there is no percentage in it for them ? because they do not want the pezzonovante to put bullets in their back and because they do get the occasional bone. There are of course others who are silent witnesses not too sure of what is happening but sure enough that they don't want to know more.

These are the people who can help India. There is no rocket science in this. Income tax rule does allow Indian nationals some reward (which is discretionary but never more than 10% of recovered wealth) when information given by them leads to disclosure of hidden income.

YOU JUST NEED TO widen the net. Include foreigners in it as well, and remove the discretionary part from this reward. Make slabs which are logical and optimal for reward given in percentage terms of wealth disclosed from information.

You will suddenly have a lot of people on your side. Their will now be percentage for people who have some remorse, or who want to get out of their master's clutches, or simply those who want to desert the sinking ship. YOU WILL BE ABLE TO GET THE BIG FISHES NOW.

Just change the law - and advertise it in national dailies. Even i believe their is no law to stop anti corruption bodies from advertising it and the Rudolf Elmers and Julius Assagne's will suddenly get a really good reason to disclose information which earlier was just leading to duress , lawsuits and death threats for them.

If it is true that $150 billion (by most conservative estimates) of wealth is stashed abroad in Swiss.. and probably around $400 billion and assume by rule of thumb of even a 50% success rate in tracing it... a BOUNTY OF $4 Billion - $10 Billion (assuming 5% reward avg.) awaits these bounty hunters...

And we get back our money.
Such a law change will sail through via a Public Interest Litigation. Their is ton of evidence in its favor and the judicial overreach etc. argument is very less as it is only a technical clarification to a law and not judicial overreach and one with great benefit to society and one for which any stupid and useless argument can't be made against.

2. HIT THEM WHERE IT HURTS: The US has shown yet again that where there is a will , there is America. Its funny though that although its the world superpower, it has ONE third the no. of people in India or even lesser but has taken action which is a thousand times more serious.
Clearly, numbers don't amount to something if our government is to be believed ? Its the gov. of USA which is following the will of its people and bringing back the billions of dollars stashed abroad in Switzerland. It has taken action against both the oldest (Wegelin) and one of the biggest Swiss banks (UBS). It has taken action 2-3 times and does not show any sign of relenting. It has taken action by promising prosecution of banks which have any presence at all in USA and from the looks of it, it is willing to close down these banks if need be. Thankfully, Rambo and Terminator aren't dead yet !!!

But in India we have our own Sunny Paa.ji and he must be wondering if the country's gov. has any backbone or not. USA did not take tanks down into the Swiss high streets as proclaimed by our Finance Minister a possible measure required to make the Swiss wake up. USA simply hit the Swiss bank where it hurts ! All it takes is backbone - first of all the government of India can regulate the entry and norms regarding Swiss owned banks and financial institutions in India and can definitely legally make life difficult for them if the Swiss keeps repeating its parrot parody of "its our Secrecy laws".. well similarly its our "not tolerating bullshit laws" by India which can do the trick. India can also indict and press cases against Swiss banks and establishment and make life a little difficult for Swiss companies as well wanting to do business in India. India can raise this issue internationally and partner with USA on this as a small quid pro quo. Even the people of the country by the anti corruption and the Swadeshi establishments starting from Baba Ramdev to Dr. Swamy to Anna Hazare can ask people of India to stop consuming Swiss products *( This is actually a whole lot practical than asking people not to consume any foreign products), for starters, and i think you'll find many takers for this specially when there are a lot of options to Swiss products. Overpriced chocolates we can do without !!!!
This will knock some sense into the Swiss for sure.

3. FILE MONEY LAUNDERING CASES: The Swiss seem to be fooling about with the countries wanting to know about black money stashed abroad , including of course India. Every time India sends them a letter rogatory or inquiry, the reply is couched in legalese and the clauses of the DTAA are used with terms such as "fishing expedition", "not enough evidence" etc. etc., to not reveal cases. The new DTAA is something which foolishly signed by India (India's finance ministry) spoils its case further and is not really an improvement over the old DTAA. Other countries have signed DTAA looking for atleast some sops - for example the UK looking to get atleast taxes on the black money stashed abroad at very decent rates.

However in this nitpicking over what is tax evasion and what is tax fraud - the Swiss escape , as for them tax evasion is as much a crime as stamping on a coackroach. But what is very conveniently forgotten by them is that a large part of this black money involves money laundering and laundering of such magnitude is there that the ultimate source of the money may well be drugs, arms dealing, human trafficking and many other crimes which the world would sit up and take notice - whether it is Europe or America. India should hence investigate the laundering aspect of crimes and raise this in International forum as well as to Switzerland. IN the in famous War room leak case for example their is evidence of money having been laundered and the USA also getting involved where US laws were broken.
This is a perfect opportunity to wring the neck of the Smug Swiss who by their actions are fostering terrorism, black marketing, terrorism and human trafficking. Funding of terrorism by black money is a fact and anti terror laws of a country are not something to mess about with. India just needs to enact strong laws and bring International pressure signing bilateral agreements with USA to protect both countries against international money laundering activities. The combined might of Uncle Sam and Jai Shri Ram, when it is bought to bear against the wily Swiss will be more than any regiment of Patton Tanks moving through Swiss boulevard. And for god sakes renegotiate the stupid DTAA signed ! IT is non binding anyways because it is not ratified by Indian Parliament (as done the Swiss) . The whole country and Parliament cannot be responsible for actions of some foolish people.

So to conclude, bringing black money back is not an idle dream and something that can materialize within the next 5 years. The money may have moved 50 times in the last 5 years following the hullaballo about black money - BUT .. and very importantly.. money always leaves a trail. And that trail can be followed.

and Now a final question - What can the common man do about these 3 steps - is it for the dummies (sorry, i mean the government) only to perform these steps or can the "AAAAAAM aadmi " do something.

Infact yes, the mango people (actually the people who rarely get to eat mangoes due to the prices) can do something - the first point can be actualized by a simple PIL, the 2nd can be partly done by Baba Ramdev, Swamiji and Anna Ji uniting the people to stop use of Swiss products till black money is bought back and the last can also be actualized via a PIL.

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