Corporate espionage: How far would you go to evade taxes?

The raiding party was dumbstruck. Just moments ago it had inspected the seal on the door of the steel almirah and found it intact. Now, after removing it and opening the door, it found the almirah completely empty. Files and documents pointing to a huge tax evasion had vanished into thin air!

Later, on closer inspection, it was discovered that the rear steel sheet had been cut open, welded back and re-painted. With stakes high and punishment much delayed and light, the tax evaders do go to such extreme lengths.

In 2012, thousands of files belonging to various business enterprises were stolen from a tax office at Mumbai after burglars broke into the sixth floor of the building. In the morning when some staff members arrived at the office, they found the lock tampered with and the files missing. This happened in spite of ten security men patrolling at any given time. Also, some of the old locks in the office had been changed. All the rooms from which files disappeared had new locks.

Inconvenience

In 2007, a fire broke out at Mayur Bhawan in New Delhi. The fire caused extensive damage to the seventh floor and partial damage to the sixth and eighth floors. Important files were gutted. Also, nearly 150,000 salaried taxpayers had to go through the inconvenience of having to refile their returns as their returns also went up in smoke. Refunds also got delayed.

In 2013, a fire broke out on the sixth floor of the Income Tax building in Marine Lines, Mumbai, during the night. Similarly, in 2014, a major fire broke out at the same office in the evening. The blaze started from the basement of the building.

In 2011, an unattended bag found by a passerby outside the income tax office in New Delhi created panic. Fire officials rushed to the spot, secured the area and carried out extensive checks. Nothing was found in the bag. Anyone could have walked in and secreted away files.

Theft, arson, panic are some of the exceptional steps taken by taxpayers who have huge stake in the files and for whom other methods, among them collusion with the tax authorities, haven’t worked.

The institution of "files" continues to remain an abiding fixture in the tax department, despite huge strides towards digitisation and paperless era. These are stored in racks in the staff rooms. Important and confidential files are kept under the personal custody of the tax officer. When the files are sent to the superior officers or to other departments, their movement is recorded. Staff rooms are accessible to the tax payers’ representatives and the files can go "missing".

In the ministries, however, the situation is different. The system of file-keeping and file movement is well regulated. Outsiders have no unhindered access. Visitors need a pass to enter; hence, every entry leaves an audit trail. Though files still find themselves stacked in dingy, musty rooms, their record-keeping, notings and movement follow an elaborate procedure. Even where the files are personally handed over to a higher authority or a minister, they are noted in the register. Thus, at any given moment, a file’s current location is known.

Embarrassment

Yet, files go missing. The list is unending. In September 2014, a £200-million deal to supply 20 British Hawk trainer jets to India was under threat after defence officials admitted the file was “lost” and that the deal could not be completed until the documents were found or redrafted. The blunder caused acute embarrassment to the government. In December 2010, documents relating to another multibillion pound aircraft project were discovered on a Delhi road. It later emerged that an official had taken it to his guesthouse and later lost it.

In March 2012, an RTI application requested records from the PMO pertaining to the imposition of Emergency. However, no such records were found.

Why do files go missing? One reason is inefficient file management. The other is a ploy to deny information to the public under RTI. Then, there’s negligence. There have been instances of the personal staff of ministers, who are outsiders and not trained in office procedure, destroying official files along with personal papers when the ministers relinquish their post. In a survey carried out to audit government funds utilisation in a particular project, numerous cases were encountered of passbooks being stolen or lost in floods, cashbooks burnt in kitchen fires. Sometimes, termites are blamed!

Wrongdoing

But the most common reason is to eliminate record of wrongdoing. The coal allocation scam, the Adarsh Society scam, and Jayanthi Natarajan’s recent claim that a file had “gone missing” and was later found in a washroom, are obvious examples. What’s the solution? Filing of FIR upon theft/destruction and reconstruction of lost records is the first immediate step. Next is to identify the responsible persons and initiate disciplinary action and prosecution under Public Records Act, 1993 against them. Relief should be given to the person affected by the loss of file. Public authorities cannot take the excuse of “missing files” for denying information under the RTI Act, the Central Information Commission has held.

An innovative solution seems to be the latest initiative of the government. A digital platform, e-SamikSha, has been launched that allows senior officers and ministers to have a view of intra and inter-departmental file movements and gives them power to intervene if, say, the concerned officer is sitting on the file.

Even the prime minister can intervene which will show as a red colour on the officer’s screen. The Cabinet secretary’s interventions also appear in red. Warnings from department secretaries or state government chief secretaries appear in other colours.

As regards unauthorised copying of documents and their leakage to consultants and companies, as seen recently in the corporate espionage case involving the petroleum ministry, it is fortuitous that the culprits were caught. For every one person snared, 99 get away undetected.

Eventually, it all boils down to whether crime pays in this country. Till it does, no amount of technology, no amount of systems and processes, and no amount of security can stop files getting misplaced, lost, stolen, burnt or leaked.