Indian Black Money: The Swindler’s List

ASHISH KHETAN accesses the black list that has been kept away from Indians for two years 

It is almost two years since the German Government had passed on the names and bank account details of eighteen Indians who had stashed their alleged ill-gotten wealth in the LGT bank of Liechtenstein, a well-known tax haven nation, 190 km from Munich, Germany. 

Germany had officially handed over the list to the Indian Government on 18 March 2009. Prime Minister Manmohan Singh and Union Finance Minister Pranab Mukherjee have since said more than once that this list cannot be disclosed to the Indian people. Opposition parties like the BJP and the Left Front have repeatedly said the names must be disclosed. The BJP has been accusing the government of shielding the names of the tax evaders and not doing enough to bring back the crores of rupees stashed away in tax havens. 

Thus, the list has become a subject of tremendous controversy and suspense. 

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. 

According to highly placed sources, the investigation into the 15 names that TEHELKA is disclosing, is close to completion and the Central Board of Direct taxes would soon prosecute these trusts and individuals under the relevant provisions of the Income tax Act. 

The sources told TEHELKA that the two main charges proved against these individuals are of tax evasion and concealment of income.

The authorities also believe that some of these account holders could be fronts for high profile individuals. One name in particular is being investigated for suspected links with a well-known Indian politician. 

The name of the chairman of a major Indian corporation is also part of the list, but TEHELKA is holding back his name until we have his full version. 

According to Pranab Mukherjee, the German Government has provided the information under the strict confidentiality clauses of the Double Taxation Avoidance Agreement, and hence they could not be disclosed at the stage of investigation. 

However, once the government launches prosecutions, the name would be made public, he had said. 

These 18 names are part of the list of 1,400 clients, which were stolen from the databank of LGT Group, the Liechtenstein bank owned by the principality's ruling family, and passed on to German tax authorities in 2008. 

The German government had paid as much as €5 million, or $7.4 million, for information on German account holders in Liechtenstein on a disk provided by an informant to the German Federal Intelligence Service, or BND. 

After this, Germany and England had launched massive investigations into the suspected tax evasions and have since prosecuted dozens of their citizens on charges of tax evasion and concealment of income. 

The German Government alone had initiated action against over 600 of its tax payers. 

Besides taking action against its own citizens, the German Government had also shared this information with other countries including India. 

Prime Minister Manmohan Singh: "Investigations are on"

But the Indian names figuring in LGT Bank list are only a tip of the iceberg. Experts estimate that Rs 65 lakh crores of ill-gotten wealth earned by Indians is stored in Swiss banks alone. 

According to R Vaidyanathan, Professor of Finance at the Indian Institute of Management, Bengaluru, the average amount stashed away by Indians in offshore tax havens between 2002 and 2006 was $136.5 billion. “These illegal funds lying in tax havens are not just related to the issue of tax evasion. It is capital flight from India and part of a corrupt nexus between politicians, bureaucrats and corporate companies,” says Vaidyanathan. 

Different Indian governments over the past 20 years have done little to bring this money back by making necessary changes in existing Indian taxation and foreign exchange management laws. 

Besides, the government has been slow in renegotiating double taxation avoidance treaties with different tax havens and making provisions for clauses under which the governments and banks could be compelled to disclose the account details. 

For instance, under the existing Indo-Swiss Double Taxation Avoidance Agreement (DTAA), information on the Swiss bank deposits of Indian residents could not to be revealed until the Indian Government furnishes evidence of criminality behind these banking transactions. 

Pranab Mukherjee: "We can't reveal the names"

India enters into DTAAs with other countries to encourage flow of foreign capital and technology, and also to check tax evasion. The purpose of a DTAA is to mitigate the hardship caused by dual taxation on the same source of income. Double taxation on a single source earned by an individual is possible under income tax, as taxation depends not on citizenship, but on residential status.

To date, India has signed comprehensive double taxation avoidance agreements with 77 countries. 

“I have asked the revenue department to reopen negotiations for all 77 double tax avoidance agreements with all countries that we have entered into so far, so that we can have real time exchange of information on tax evasion and tax avoidance,” Mukherjee had said at the India Economic Summit in November 2009. 

Since the recession hit the economies of developed countries, the Organisation for Economic Cooperation and Development (OECD) has been leading a campaign for transparency in the international banking system, and making the tax havens to necessarily exchange information with other countries where tax evasions are involved. 

The US in particular has been proactive in using the might of its economy to make different tax havens fall in line, and share the names of US citizens who have deposited money in these tax havens. 

For instance, the UBS Bank, a Swiss bank and the world’s largest wealth management company, came under US scrutiny in June 2008 to uncover the identity of US nationals who maintained secret accounts in the bank and were defrauding the American revenue department. 

When the US Government threatened to prosecute the USB Bank, the bank paid a fine of $780 million and also agreed to reveal the details of the hidden assets of US nationals within a fixed time frame failing which it would face prosecution.

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ashish.khetan@tehelka.com